HRL - Embedded Expectations Analysis - 2020 08 21
Hormel Foods Corporation (HRL:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 33.9x Uniform P/E. At these levels, the market has bullish expectations for the firm, and management is confident about dividends, strong product repeat rates, and Project Orion updatesSpecifically, management is confident that they increased the quarterly dividend, that the repeat rates of Herdez and Black Label bacon are strong, and that moving to more user-convenient products is a win-win opportunity for them and their operators. In addition, they are confident that Jennie-O Turkey Store is having strong overall demand across many areas and that they have a very balanced foodservice business in the channels they compete in. Furthermore, management is confident that their Project Orion is on track and that they will give a live financial system update. Finally, they are confident in their ability to continue evaluating M&A opportunities and that they received the necessary protective gear for their employees
Hormel Foods is primarily engaged in the production of meat and food products and the marketing of those products throughout the United States and internationally. The company's segments are: Grocery Products, which consists of the processing, marketing, and sale of shelf-stable food products; Refrigerated Foods, which consists of the processing, marketing, and sale of branded and unbranded pork, beef, chicken, and turkey products; Jennie-O Turkey Store, which consists of the processing, marketing, and sale of branded and unbranded turkey products; and International and Other, which includes Hormel Foods International Corporation that manufactures, markets, and sells the company's products internationally.
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