Results: Hormel Foods Corporation Exceeded Expectations And The Consensus Has Updated Its Estimates
As you might know, Hormel Foods Corporation (NYSE:HRL) just kicked off its latest first-quarter results with some very strong numbers. It was overall a positive result, with revenues beating expectations by 2.8% to hit US$3.0b. Hormel Foods also reported a statutory profit of US$0.40, which was an impressive 21% above what the analysts had forecast. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Check out our latest analysis for Hormel Foods
Taking into account the latest results, Hormel Foods' nine analysts currently expect revenues in 2024 to be US$12.3b, approximately in line with the last 12 months. Per-share earnings are expected to increase 7.5% to US$1.56. Before this earnings report, the analysts had been forecasting revenues of US$12.2b and earnings per share (EPS) of US$1.54 in 2024. 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.
The analysts reconfirmed their price target of US$31.84, showing that the business is executing well and in line with expectations. 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$35.00 per share, while the most bearish prices it at US$28.00. This is a very narrow spread of estimates, implying either that Hormel Foods is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Hormel Foods' revenue growth is expected to slow, with the forecast 1.4% annualised growth rate until the end of 2024 being well below the historical 7.0% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 2.6% annually. Factoring in the forecast slowdown in growth, it seems obvious that Hormel Foods is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Hormel Foods' revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 forecasts for Hormel Foods going out to 2026, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Hormel Foods that you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
