Measuring Hormel Foods Corporation’s (NYSE:HRL) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess HRL’s recent performance announced on 29 October 2017 and compare these figures to its historical trend and industry movements. Check out our latest analysis for Hormel Foods
Was HRL’s weak performance lately a part of a long-term decline?
For the most up-to-date info, I use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This allows me to analyze various companies on a similar basis, using the most relevant data points. For Hormel Foods, its most recent earnings (trailing twelve month) is US$846.74M, which, in comparison to the previous year’s level, has fallen by -4.81%. Since these figures are relatively short-term thinking, I’ve calculated an annualized five-year figure for Hormel Foods’s earnings, which stands at US$631.57M This shows that although earnings growth was negative against the previous year, over the longer term, Hormel Foods’s earnings have been growing on average.
How has it been able to do this? Let’s take a look at if it is solely owing to an industry uplift, or if Hormel Foods has seen some company-specific growth. In the past couple of years, Hormel Foods increased its bottom line faster than revenue by successfully controlling its costs. This brought about a margin expansion and profitability over time. Scanning growth from a sector-level, the US food industry has been growing, albeit, at a unexciting single-digit rate of 7.07% over the previous twelve months, and 7.37% over the past half a decade. This suggests that whatever tailwind the industry is benefiting from, Hormel Foods has not been able to gain as much as its industry peers.
What does this mean?
Though Hormel Foods’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. You should continue to research Hormel Foods to get a better picture of the stock by looking at:
- 1. 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.
- 2. Financial Health: Is 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.
- 3. 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 29 October 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.