Hormel Foods Corporation

🇺🇸New York Stock Exchange
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Hormel Foods Corporation stock analysis HRL overview
Slightly Bullish +25

Hormel Foods Corp (NYSE:HRL) Offers 5.64% Yield in Screener - ChartMill

📊 Hormel Foods Corp (NYSE:HRL) is featured as a dividend stock with a Dividend Rating of 7 out of 10 based on ChartMill screening criteria.

💰 The company offers an annual dividend yield of 5.64%, which significantly exceeds the industry average of 2.34% and the S&P 500 average of 1.82%.

🏆 Hormel has maintained and increased its dividend payments for over 10 consecutive years without a cut.

🍖 The business operates as a leading producer of branded food products including SPAM, Jennie-O, and Planters across retail and international markets.

✅ Hormel demonstrates solid financial health with a Debt-to-Equity ratio of 0.36, a Current Ratio of 2.66, and an Altman-Z score of 3.38 indicating low bankruptcy risk.

⚠️ A notable concern is the payout ratio of 130.30% based on trailing earnings, suggesting the dividend is not fully covered by net income in the current period.

💵 Despite the high payout ratio, the company's free cash flow generation helps mitigate sustainability concerns regarding the dividend.

📈 The stock has a moderate profitability score of 5, supported by positive Return on Assets (3.68%) and Return on Equity (6.17%).

🔄 Earnings per share are projected to grow at an annual rate of 5.70% over the next few years, which could improve dividend coverage in the future.

🛡️ Hormel is included in additional ChartMill screener lists for High Free Cash Flow Stocks and value stocks with Strong Balance Sheets.

Bullish Signals
  • Shares are generating free cash flow sufficient to support operations despite a high payout ratio.
  • Earnings per share are expected to rebound with a projected growth rate of 5.70% over the next years.
  • Hormel carries an Altman-Z score of 3.38, indicating no immediate bankruptcy risk.
  • The company maintains a robust Current Ratio of 2.66, demonstrating strong short-term liquidity.
  • Hormel scores a Dividend Rating of 7 out of 10, confirming a solid operational and financial foundation.
  • The stock is currently included in ChartMill's High Free Cash Flow Stocks screen.
  • HRL qualifies as part of the value stocks with Strong Balance Sheets screen, meeting strict financial health criteria.
Risk Factors
  • The dividend payout ratio sits at 130.30% based on trailing twelve-month earnings, a clear warning sign that the current dividend is not fully covered by net income.
  • Although margins have been adequate for operations, the article notes that margins have seen some pressure recently, which could threaten future profitability and dividend sustainability.
  • The stock is currently trading at a high yield of 5.64%, significantly above the industry average of 2.34%, which can sometimes signal market skepticism about long-term growth prospects or underlying valuation concerns.
Full Analysis
Hormel Foods Corp (NYSE:HRL) has been highlighted in a stock screener for offering an attractive dividend yield of 5.64%, which significantly outpaces both the Food Products industry average of 2.34% and the S&P 500 average of 1.82%. The article notes that Hormel has earned a Dividend Rating of 7 out of 10, reflecting its status as a producer of well-known branded products like SPAM, Jennie-O, and Planters across retail, foodservice, and international markets. Furthermore, the company has maintained and increased its dividend for over 10 consecutive years without a cut, placing it in the top quartile of its industry peers regarding yield performance. While the high yield is a primary draw, the analysis points out a notable warning sign: a payout ratio of 130.30% based on trailing twelve-month earnings indicates that the current dividend is not fully covered by net income. Despite this, Hormel demonstrates moderate financial health with a Debt-to-Equity ratio of 0.36, an Altman-Z score of 3.38 suggesting no immediate bankruptcy risk, and a Current Ratio of 2.66 indicating strong short-term liquidity. The profitability metrics are rated as adequate for dividend strategies, supported by a positive Return on Assets of 3.68%, a Return on Equity of 6.17%, and consistent positive earnings and operating cash flow over the past five years. Looking ahead, analysts project that earnings per share will rebound with a growth rate of 5.70% over the next few years, which is expected to gradually improve dividend coverage and mitigate the risk associated with the high payout ratio. The stock also appears in other screener lists for High Free Cash Flow Stocks and value stocks with Strong Balance Sheets, reinforcing its operational cash generation capabilities relative to its price. Investors are encouraged to monitor the sustainability of this yield as earnings growth materializes, but the current fundamentals suggest a company capable of supporting its core operations and dividend obligations despite recent margin pressures.