Overcome in recent indexing: Hormel Foods Corporation (NYSE: HRL)

On 25 March 2020, Hormel Foods Corporation (NYSE: HRL) spotted trading -18.61% off 52-week high price. On the other end, the stock has been noted 13.35% away from the low price over the last 52-weeks. The stock changed -6.49% to recent value of $41.94. The stock transacted 6298401 shares during most recent day however it has an average volume of 3013.59K shares. The company has 549.74M of outstanding shares and 279.5M shares were floated in the market.

Hormel Foods corporate logo (PRNewsFoto/Hormel Foods Corporation)

Hormel Foods Corporation (HRL) recently stated results for the first quarter of fiscal 2020. All comparisons are to the first quarter of fiscal 2019 unless otherwise noted. The impact of the CytoSport divestiture is excluded in the presentation of the non-GAAP measures below.

EXECUTIVE SUMMARY

Volume of 1.2B lbs., down 1%; organic volume1 up 2%

Net sales of $2.4B, up 1%; organic net sales1 up 4%

Pretax earnings of $290M, down 5% primarily Because of the divestiture of CytoSport

Operating margin of 11.8%, contrast to 13.0% last year

Effective tax rate of 16.3%, contrast to 21.3% last year

Diluted earnings per share of $0.45, up 2%

Year-to-date cash flow from operations of $188M, up 1%

Fiscal 2020 earnings guidance reaffirmed at $1.69 to $1.83 per share

SELECTED FINANCIAL DETAILS

Income Statement

  • Selling, general and administrative expenses increased year-over-year. The company lapped a one-time benefit from a legal settlement in fiscal 2019.
  • Advertising investments were $35M, contrast to $39M last year. The decline was attributed to the CytoSport divestiture.
  • Operating margin was 11.8%, contrast to 13.0% last year, Because of lower gross margins in Grocery Products.
  • The effective tax rate was 16.3%, contrast to 21.3% last year. The rate was influenced by a large volume of stock option exercises during the quarter. The full-year effective tax rate for fiscal 2020 is still predictable to be between 20.5% and 22.5%.

Cash Flow Statement

  • Cash flow from operations was $188M, up 1%.
  • The company paid its 366th consecutive quarterly dividend on Feb. 18, 2020, at the yearly rate of $0.93 per share, an 11% increase over the previous year.
  • Capital expenditures in the first quarter were $58M, contrast to $39M last year. The company’s target for capital expenditures in fiscal 2020 is $360M. Large projects include the Burke pizza toppings plant expansion, a new dry sausage facility in Nebraska, Project Orion and other projects to support growth of branded products.
  • The company did not repurchase shares during the quarter.
  • Depreciation and amortization expense in the first quarter was $49M, contrast to $40 last year. The full-year expense is predictable to be about $200M.

Balance Sheet

  • The company remains in a strong financial position with limited debt and consistent cash flows.
  • Cash on hand increased to $724M from $673M at the starting of the year.
  • Total long-term debt is $309M, up from $250M at the starting of the year. The increase is attributable to the adoption of the new lease accounting standards.
  • Working capital increased to $1,372M from $1,256M at the starting of the year, primarily related to higher levels of cash and inventory.

Its earnings per share (EPS) expected to touch remained 4.00% for this year while earning per share for the next 5-years is expected to reach at 4.00%. HRL has a gross margin of 19.60% and an operating margin of 12.30% while its profit margin remained 10.30% for the last 12 months.   According to the most recent quarter its current ratio was 2.3 that represents company’s ability to meet its current financial obligations. The price moved ahead of -4.45% from the mean of 20 days, -8.15% from mean of 50 days SMA and performed -3.07% from mean of 200 days price. Company’s performance for the week was -13.11%, -6.22% for month and YTD performance remained -7.03%.

 

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