Shares of Hormel Foods (HRL, Financial) fell significantly today following the release of their fiscal third-quarter 2024 financial results. Hormel stock dropped by 7.47%, causing it to approach nine-year lows.
In Q3, Hormel (HRL, Financial) reported net sales of $2.9 billion, down 2% year over year, although surpassing Wall Street's expectations. Net income rose nearly 9% to $177 million, also ahead of estimates. Despite these positive financial figures, the stock price declined due to a considerable downward revision in the company's full-year financial guidance.
Hormel's management had previously projected full-year net sales to be in the range of $12.2 billion to $12.5 billion. This forecast has now been reduced to $11.8 billion to $12.1 billion, a decrease of 1% to 5%. This sudden revision, especially with only one quarter remaining in the fiscal year, has dampened investor sentiment, contributing to the sharp decline in the stock price.
Presently, Hormel Foods' stock is trading at $30.67 with a market capitalization of approximately $16.81 billion. Despite the recent decline, the company's Altman Z-Score of 3.74 indicates strong financial health, and a Beneish M-Score of -2.78 suggests it is unlikely to be a manipulator. The stock's current Price-Earnings (P/E) ratio stands at 21.9.
Hormel Foods (HRL, Financial) offers a dividend yield of 3.69%, which is close to its 10-year high, making it an attractive option for dividend-focused investors. The company has a long history of increasing dividends, with a five-year dividend growth rate of 7.7%.
On the valuation front, the GF Value for Hormel Foods is calculated to be $44.05, indicating that the stock is significantly undervalued at its current price. Investors can check the detailed valuation metrics on the GF Value page for Hormel Foods.
Despite the positive financial health indicators, Hormel Foods faces several warning signs. The company's gross margin and operating margin have been in long-term decline, and its revenue growth has slowed down over the past 12 months. The company's debt-to-equity ratio stands at 0.48, and its EBITDA growth over the past year has been negative at -12.6%.
In summary, while Hormel Foods (HRL, Financial) has demonstrated strong financial metrics and attractive dividends, the recent guidance revision has impacted investor sentiment, causing a significant drop in the stock price. Potential investors should consider both the short-term challenges and the long-term financial health of the company before making any investment decisions.
