Key Takeaways
📈 Hormel offers a forward dividend yield of 3.93% and has increased its dividend for 58 consecutive years, backed by consistent cash flow and a high payout ratio.
💰 The company generated $1.17 billion in operating cash flow over the trailing twelve months, with free cash flow comfortably covering dividend payments and supporting a strong cash position.
🔍 Analysts have a consensus “Hold” rating with an average price target of $32.33, reflecting modest upside and mixed sentiment after a softer earnings report.
Updated 5/13/25
Hormel Foods (HRL) has built its reputation on consistent execution, a diverse brand lineup, and a deep-rooted commitment to returning value to shareholders. Known for household staples like SPAM, Skippy, and Applegate, the company operates with a steady hand through shifting market cycles. Backed by strong free cash flow and a 58-year track record of dividend increases, it continues to appeal to long-term income-focused investors.
Recent earnings have faced some pressure, with profits dipping due to commodity price shifts and operational challenges in segments like Jennie-O and Planters. Still, Hormel maintains a clear strategic direction through its Transform and Modernize initiative and a disciplined approach to capital allocation, all while offering a near 4% dividend yield and stable financial footing.
Recent Events
Hormel Foods (HRL) has had a bit of a bumpy ride lately. The stock is down more than 17% over the past year, a sharp contrast to the broader market, which has marched upward. But for dividend-focused investors, that price dip could be less of a concern and more of an opportunity.
The company’s most recent quarterly results showed some pressure on the earnings front. Profits were down about 22% from the same period last year, and revenue slipped slightly by 0.3%. It’s a tough environment for food companies, with input costs rising and margins feeling the squeeze. Hormel hasn’t been immune to those pressures, especially with its mix of commodity exposure and branded products.
Still, not everything in the report was bleak. Cash flow remains strong—over $1.1 billion in operating cash over the last twelve months—and Hormel is holding nearly $870 million in cash. Debt levels are modest, and the current ratio of 2.45 signals a solid liquidity position. This conservative financial posture is part of what’s allowed Hormel to weather past storms, and there’s nothing to suggest that’s changed now.
What’s also notable is that despite the earnings dip, the dividend stayed intact. That says a lot about the company’s priorities.
Key Dividend Metrics
📈 Forward Dividend Yield: 3.93%
💰 Annual Dividend: $1.16 per share
📆 Ex-Dividend Date: April 14, 2025
📊 Payout Ratio: 82.43%
🧾 5-Year Average Yield: 2.61%
🧱 Dividend Streak: 58 years of uninterrupted increases
🛡️ Safety: Backed by healthy free cash flow and low leverage
These numbers alone set Hormel apart in the dividend space.
Dividend Overview
At nearly 4%, the forward dividend yield on Hormel is the highest it’s been in a while, especially when compared to its 5-year average of 2.61%. The bump in yield is mostly due to the drop in the share price, not an oversized dividend increase. But that’s the kind of setup that can catch the attention of income investors.
Hormel has kept up its dividend payments through good times and bad, and management doesn’t show any sign of changing that playbook. Even with a payout ratio north of 80%, the dividend remains well-covered by cash flow. It’s a slightly elevated ratio, sure, but Hormel has always operated with financial discipline and avoids making reckless capital decisions. They don’t chase big-ticket acquisitions or buy back shares aggressively. The focus has always been on brand development, operational strength, and rewarding long-term shareholders through consistent dividends.
And it’s not just the yield. Hormel’s beta is just 0.34, which means it tends to be far less volatile than the broader market. For investors seeking stable income with minimal portfolio shake-up, that low-volatility profile adds to the appeal.
Dividend Growth and Safety
Hormel’s dividend story is about consistency. The company has raised its dividend every year for 58 straight years, placing it in the exclusive club of Dividend Kings. This isn’t just a long streak—it’s a sign of real financial commitment, discipline, and resilience.
Dividend growth hasn’t always been aggressive, but it’s been dependable. In recent years, increases have slowed a bit as the company navigates higher costs and shifting consumer trends. But there’s no sign of that growth halting altogether. It’s the steady kind of dividend policy that investors can build around.
The real backbone of this dividend reliability is free cash flow. Hormel has generated over $615 million in levered free cash over the past year. That comfortably covers the dividend, even at the current higher payout ratio. What’s more, the company holds a sizable cash cushion and carries relatively little debt, giving it room to maneuver if the business environment tightens further.
Hormel isn’t going to wow anyone with rapid growth or bold moves. That’s not what it’s about. This is a company that plays the long game, managing conservatively and putting shareholder returns at the forefront. For investors who value income, reliability, and capital preservation, that approach offers a lot of peace of mind.
Cash Flow Statement
Hormel Foods continues to show strength in its cash-generating ability, with $1.17 billion in operating cash flow over the trailing twelve months. While that’s a step down from the prior year’s $1.27 billion, it still reflects a solid operating performance, particularly given the pressures on margins and input costs across the food sector. Free cash flow came in at $890.6 million, a healthy margin above capital expenditures of $281.4 million, signaling efficient capital use and strong operational discipline.
On the financing side, the company took a more aggressive approach. Debt issuance totaled just under $1 billion, almost entirely offset by $959 million in debt repayments, showing a balancing act between maintaining liquidity and managing liabilities. There were no stock repurchases recorded in the most recent period, indicating a more conservative capital allocation strategy in the face of macro uncertainty. Despite these outflows, Hormel’s cash position ended at $846.3 million, up from $741.9 million the year before. This stable cash foundation reinforces the company’s ability to support its dividend commitments and maintain flexibility going forward.
Analyst Ratings
Hormel Foods has recently seen a change in how Wall Street views its outlook, with several analysts adjusting their ratings and targets. 📈 Bank of America shifted its stance from “Underperform” to “Neutral,” nudging the price target up from $29 to $35. The move reflects a more stable outlook, likely tied to Hormel’s consistent cash flow and disciplined financial management.
🌟 Barclays took a more bullish approach, upgrading the stock to a “Strong Buy” while lifting its price target to $36. Their optimism centers around Hormel’s margin improvement efforts and the longer-term benefits of strategic investments across its product lines.
Citigroup held its “Buy” rating but trimmed its price target slightly from $37 to $35. The adjustment seems to account for lower-than-expected near-term earnings but keeps faith in the company’s long-term fundamentals. 🧐 JP Morgan also leaned more neutral, moving from “Underweight” to “Neutral” with a price target increase from $28 to $29, signaling a shift toward a more balanced view after prior caution.
On the flip side, BNP Paribas entered the conversation with an “Underperform” rating and a $28 target. Concerns here center around cost pressures and the potential impact of commodity price fluctuations on margins. 🚨
Right now, the overall consensus stands at a “Hold” rating, with an average price target of $32.33. That suggests modest upside, with analysts acknowledging Hormel’s reliable dividend and solid financial footing while remaining cautious about its growth trajectory in a competitive food landscape. 🧃
Earning Report Summary
A Mixed Start to the Fiscal Year
Hormel Foods kicked off its fiscal 2025 with a blend of resilience and headwinds. Revenue for the quarter held steady at $2.99 billion, showing a touch of organic growth at 1%. But earnings didn’t keep pace. Net income slipped to $170.5 million, or $0.31 per share, compared to $218.8 million, or $0.40 per share, from the same period last year. On an adjusted basis, earnings landed at $0.35 per share, missing the mark most analysts were expecting.
Even so, certain parts of the business stood strong. The company’s well-known branded products—think SPAM, Applegate, and Hormel Black Label—continued to hold their ground with customers. CEO Jim Snee emphasized how proud the team is of the performance from these value-added brands. He pointed out that Planters, which had struggled recently, showed solid signs of recovery, and leadership is optimistic that momentum will carry through the rest of the year.
Pressure Points in Key Segments
Not everything went smoothly, though. The Retail and Foodservice segments both saw their profits decline. Retail was down 20%, and Foodservice slipped by 8%. The company cited higher costs and tough comparisons with last year’s turkey pricing, which had been unusually high. International sales also edged lower by 2%, though profits from that segment actually ticked up 4%, helped by strong business in China and better export margins.
These segment-level results highlight the balancing act Hormel is currently navigating—steady sales volume, but pressure on the bottom line from elevated expenses and mixed performance across categories.
Eyes on Transformation and Future Gains
Despite the dip in quarterly profits, Hormel is sticking with its full-year guidance. The company expects organic net sales to grow somewhere between 1% and 3%, and adjusted earnings per share are forecast to land between $1.58 and $1.72. That shows confidence from management in the bigger picture.
One area that’s getting a lot of attention is the company’s Transform and Modernize initiative. This isn’t just about trimming costs—it’s a larger effort to become more efficient and better positioned for growth. The goal is to generate between $100 million and $150 million in savings and improvements over the year. It’s clear that Hormel is playing a long game, aiming to set itself up for better performance in the back half of the year and beyond.
Capital spending also continues at a steady clip. The company invested $72 million this quarter, much of it going toward capacity expansions for its Fire Braised and Applegate products—both seen as important growth drivers going forward.
So while the quarter wasn’t without its challenges, Hormel seems focused on staying the course, leaning into its strongest brands and pushing forward with plans to drive efficiency and long-term value.
Management Team
Hormel Foods is led by a steady and experienced leadership group that’s been with the company through thick and thin. Jim Snee, who has been with Hormel since 1989, currently serves as President and CEO. He’s been a key figure in guiding the company through international expansion and building up its impressive brand portfolio. Snee plans to retire at the end of 2025, but he’ll stick around as a strategic advisor to the board for another 18 months after stepping down.
Jacinth Smiley, the Executive Vice President and Chief Financial Officer, brings a strong background in finance and operations and plays a major role in the company’s strategic decisions. Other members of the executive team include John Ghingo, Executive Vice President of Retail, and Scott Aakre, Group Vice President and Chief Marketing Officer for Retail. Together, this team is responsible for overseeing operations and driving brand development across a diverse product lineup. Hormel’s board of directors also brings a broad range of experience and provides solid oversight and guidance.
Valuation and Stock Performance
Hormel’s stock is currently trading around $29.27, which represents a drop of about 17 percent over the past year. That’s well below the performance of the broader market during the same period, and it shows some investor caution about the near-term outlook. The stock has seen a 52-week high of $36.86 and a low of $27.59, which gives a sense of its trading range over the past year.
From a valuation standpoint, Hormel trades at a trailing P/E ratio of about 21 times earnings, slightly under its five-year average. Its forward P/E is closer to 18.9, suggesting expectations for modest earnings improvement. The price-to-sales ratio is around 1.36, and the price-to-book ratio is roughly 2.02. These figures don’t scream undervaluation, but they’re also not excessive, especially for a company with strong cash flows and a consistent dividend history.
Analyst sentiment is fairly cautious. The average 12-month price target currently sits around $32.33, which implies a potential upside of roughly 10 percent from where the stock is now. That modest target reflects the mixed signals around Hormel’s performance—strong brand equity and cash generation balanced against near-term margin pressures.
Risks and Considerations
There are a few clear risks on Hormel’s radar. First and foremost is commodity price volatility. Input costs, especially for pork and turkey, can swing profits significantly. The company’s Jennie-O segment has already taken a hit from lower whole-bird turkey prices, which puts downward pressure on earnings.
Hormel also faces the occasional operational disruption. One recent example is the temporary shutdown of a Planters facility in Virginia, which impacted supply. These events can be short-term in nature, but they do affect sales and margins when they occur. In the broader picture, Hormel operates in a very competitive space where store brands and new entrants are constantly trying to chip away at market share.
There are also regulatory risks to watch. Hormel, like all food producers, is subject to rigorous standards around safety and labeling. Any slip-ups here can lead to costly recalls and reputational damage. The company recently issued a recall of certain Planters products due to contamination concerns, which underscores how these issues can crop up.
Consumer behavior is another wildcard. People are becoming more health-conscious and more interested in plant-based alternatives. Hormel has made moves to adapt, but staying relevant in a rapidly evolving food landscape will require continued innovation and investment.
Final Thoughts
Hormel Foods continues to be a reliable presence in the food industry. The company’s leadership team has proven it can manage through both stable and uncertain times, and its longstanding commitment to paying dividends speaks volumes about how it views shareholder value.
The stock may not be the market’s top performer right now, but it offers consistency, a strong brand lineup, and a clear plan to modernize operations and position itself for the future. The company’s push to drive efficiencies and innovate within its product lines shows it’s not standing still, even as the food industry undergoes major shifts.
For investors looking at the long term, Hormel offers a combination of income, stability, and strategic potential. Risks are real, as they always are, but so are the tools the company has to manage them—starting with a balance sheet that supports growth and a culture that prizes operational excellence.