Hormel Foods (HRL – Research Report), the Consumer Defensive sector company, was revisited by a Wall Street analyst today. Analyst Peter Galbo from Bank of America Securities remains neutral on the stock and has a $33.00 price target.
Peter Galbo has given his Sell rating due to a combination of factors that indicate underperformance in Hormel Foods’s financials and projections. The company’s fourth-quarter adjusted EPS of $0.42 fell short of Bank of America’s estimate and the Visible Alpha Consensus, both at $0.45. This shortfall was primarily due to weaker-than-expected sales in the Retail and International segments, despite a slight compensatory performance in Foodservice. Additionally, operating income was lower in the same underperforming segments. These indicators, alongside a gross profit and margin that were significantly below estimates, contribute to a cautious outlook on the company’s stock.
Furthermore, Hormel Foods’s FY24 financial guidance suggests only a modest year-over-year growth in net sales and an adjusted EPS that does not meet the expectations set by Bank of America’s estimate. The company faces challenges such as a decline in the turkey market and softness in China, which are expected to impact earnings in the first half of FY24. Despite Hormel Foods’s efforts to grow through transformation and modernization initiatives, the overall assessment by Peter Galbo is that the company’s financial outlook and exposure to volatile input costs, such as pork, may hinder near-term growth and limit potential for multiple expansion, justifying the Underperform rating and a price objective that suggests limited upside potential.
Galbo covers the Consumer Defensive sector, focusing on stocks such as Hormel Foods, Lamb Weston Holdings, and JM Smucker. According to TipRanks, Galbo has an average return of 5.3% and a 53.93% success rate on recommended stocks.
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Hormel Foods (HRL) Company Description:
Founded in 1891, Hormel Foods Corp. is a Minnesota-based food company, which produces and markets various meat and food products to retail, food service, deli, and commercial customers. It operates through the following four segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other.
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