What Exactly Does Hormel Foods Stock Have to Offer?

HRL may best suited for dividend investors looking to collect a secure return rather than as a growth play

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Hormel Foods Corporation (NYSE:HRL) is an American food company with global brands sold in more than 80 countries worldwide. Its brands include Skippy, SPAM, Hormel Natural Choice, Columbus, Applegate, Justin's, Wholly, Hormel Black Label and more than 30 other household brands.

On March 22, the company announced that it will pay a quarterly dividend of $0.245 to shareholders of record at the close of business on April 12. The payment will be made on May 17 and will be the 371st consecutive quarterly dividend paid by Hormel Foods. Since becoming a public company in 1928, Hormel Foods Corporation has paid a regular quarterly dividend without a single interruption. It currently boasts a dividend yield of 2.02%.

Hormel Foods stock is up 14.6% in the past 12 months while it sports a 4% year-to-date lead. And while the 20-day moving average has helped to cradle the equity during the better part of March, it looks as if pressure at the $48.50 region is keeping a tight lid on shares. 

From a fundamental point of view, Hormel Foods offers stability, but not much more for potential investors. The growth potential is limited for HRL, as it is currently trading at a premium price but offers little revenue growth and a decreasing net income trend. Hormel Foods stock currently has a high price-earnings ratio of 29.97 and a forward price-earnings ratio of 27.78.

Moreover, in fiscal 2020, Hormel Foods increased revenues by roughly $110 million or 1.2% and has only improved its top line by $440 million or 4.8% since fiscal 2017. On the bottom-line, HRL saw a $70 million, or 7.2%, decrease in fiscal 2020. Its net income has also decreased by $104 million over the past two years. Nonetheless, Hormel Foods holds a solid balance sheet with $1.73 billion in cash and $1.30 billion in debt. Hormel Foods stock may best suited for dividend investors looking to collect a secure return rather than as a growth play.

 

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