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Last week, you might have seen that Hormel Foods Corporation (NYSE:HRL) released its yearly result to the market. The early response was not positive, with shares down 6.2% to US$46.87 in the past week. It was a credible result overall, with revenues of US$9.6b and statutory earnings per share of US$1.66 both in line with analyst estimates, showing that Hormel Foods is executing in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the ten analysts covering Hormel Foods are now predicting revenues of US$9.92b in 2021. If met, this would reflect an okay 3.2% improvement in sales compared to the last 12 months. Per-share earnings are expected to increase 5.8% to US$1.79. In the lead-up to this report, the analysts had been modelling revenues of US$10.1b and earnings per share (EPS) of US$1.82 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$46.23. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Hormel Foods at US$58.00 per share, while the most bearish prices it at US$34.50. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Hormel Foods shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Hormel Foods' rate of growth is expected to accelerate meaningfully, with the forecast 3.2% revenue growth noticeably faster than its historical growth of 0.9%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 3.0% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Hormel Foods is expected to grow at about the same rate as the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$46.23, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Hormel Foods. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Hormel Foods analysts - going out to 2025, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Hormel Foods .
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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