Assessing Hormel Foods Corporation's (NYSE:HRL) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess HRL's recent performance announced on 26 January 2020 and evaluate these figures to its long-term trend and industry movements.
How Well Did HRL Perform?
HRL's trailing twelve-month earnings (from 26 January 2020) of US$980m has increased by 3.1% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 8.5%, indicating the rate at which HRL is growing has slowed down. To understand what's happening, let’s take a look at what’s occurring with margins and whether the rest of the industry is feeling the heat.
In terms of returns from investment, Hormel Foods has fallen short of achieving a 20% return on equity (ROE), recording 16% instead. However, its return on assets (ROA) of 12% exceeds the US Food industry of 6.1%, indicating Hormel Foods has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Hormel Foods’s debt level, has declined over the past 3 years from 24% to 15%.
What does this mean?
Though Hormel Foods's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Hormel Foods to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HRL’s future growth? Take a look at our free research report of analyst consensus for HRL’s outlook.
- Financial Health: Are HRL’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 26 January 2020. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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