A Closer Look At Hormel Foods’ Growth

by Trefis Team
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Hormel Foods (NYSE: HRL) is a global branded food company with over $9 billion in annual revenues across more than 80 countries worldwide. The company has seen slow growth in sales but steady profits the past several years. The company’s sales have grown from $8.2 billion in 2012 to $9.2 billion in 2017, about a 2.3% average yearly growth, while its operating margin expanded from 9% in FY’12 to 14% in FY’17.

Hormel’s diluted EPS has increased from $0.93 in 2012 to $1.57 in 2017. We have created an interactive dashboard outlining how the company has grown over the past few years, as well as our forecasts going forward. You can modify our forecasts and estimates to see how changes would impact the company’s earnings.

The company’s top-line growth over the years has largely been driven by strong sales from three categories – refrigerated foods, grocery products, and international sales. These three categories together contribute over 70% of Hormel’s total sales.

However, the company’s Net Sales saw pressure in 2017 primarily due to the volatility in the commodities market. The decline in sales was largely due to the weak performance from the Jennie-O Turkey Store and Specialty Foods segments. Hormel’s gross margin has been healthy over the years prior to a decline in 2017, which was partly driven by the avian flu which affected the Turkey segment negatively. Hormel’s strategic acquisitions and innovation efforts, along with brand building, have strengthened its product portfolio, which has also been a major factor contributing to its growth.

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