HRL - Embedded Expectations Analysis - 2021 06 21
Hormel Foods Corporation (HRL:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 29.7x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, and management is confident about foodservice business growth, normalized operations, and retail pricingSpecifically, management is confident their pizza toppings portfolio and brands have driven growth in foodservice sales, their refrigerated retail and foodservice business will see continued success both domestically and in China, and that demand for avocado products has started to return. Additionally, they are confident they will benefit from more normalized operations in the latter half of fiscal 2021, that schools and universities will open and operate in a more traditional manner in Q3, and that the biggest driver of pricing improvement was the SKIPPY price increase earlier in 2021. Furthermore, management is confident they are seeing distribution gains, stronger household penetration, and increased sales velocity.
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.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.