More than other companies that produce packaged meat,Hormel
) has tried to come out with innovative products for consumers on
It's produced pepperoni snack packages, premium hams, deli
meats, party trays and refrigerated offerings. A couple of recent
additions to its portfolio include Skippy peanut butter, which it
purchased, and Rev Wraps, a line of snacks made up of ham and
The company has said it expects headwinds in Q2 and Q3 because
of the cold eastern winter and rising commodity prices,
especially pork and beef. But it's managed three quarters of
accelerating earnings with quarterly EPS changing from -4% to
growth of 2%, 18% and 19%. Analysts in the most recent quarter
are expecting a 22% increase when it reports May 21 before the
Sales growth has been running in the mid single digits the
past several quarters.
Hormel is the No. 3 ranked company by Composite Rating out of
seven companies in the Food-Meat Products industry group, which
is No. 10 out of 197 industry groups, as of Wednesday's IBD. The
group has risen from No. 53 just seven weeks ago.
It's had only two years of earnings decline in the past 12
years. They were 2002 and 2008, which were tough years in every
The company has produced a return on equity of 17% with just a
small amount of debt. Pretax margins are running around 9%.
The five-year annualized EPS growth rate is 13%, and the
Earnings Stability Factor is 8 on a 0 to 99 scale, where low
numbers translate to steady earnings growth.
Analysts are forecasting 16% growth this year and 13% next
year, impressive for a mature company in the food business.
Hormel pays a dividend of 20 cents per share. That's up from
8.75 cents in 2000. That translates to a 1.6% annual yield at
current stock prices.