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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Hormel Foods Corporation (XNYS:HRL) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
HRL
Name:
HORMEL FOODS CORPORATION (XNYS:HRL)
Sector:
334.40M
Industry:
Packaged Foods
CEO:
Mr. James Snee
Total Employees:
20,000
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -125.64% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF HORMEL FOODS CORPORATION(HRL) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND PACKAGED FOODS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
46.39
One Month Price Target:
$46.42
Six Month Price Target :
$46.57
Likely Price in One Year's Time:
Ticker:
$46.76
Likely Trading Range Today Under (Normal Volatility)
$46.27
Price Upper limit ($) :
$46.52
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$44.91
This week:
$43.07
This month :
$39.75
Other Primary facts
Market Cap:
25.43B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
546.20M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
13.84%
-8.76%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$53.28
$50.13
$39.50
$42.65
Medium risk (<10%) entry points
Buy Call
Sell Call
$49.11
Buy Put:
Sell Put:
$48.44
$43.66
$44.34
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
HRL
Sharpe Ratio:
0.38%
Comparison:
HRL, is amongst the top 60% stocks with highest risk-adjusted returns
Sharpe ratio is -70.95% lower than the industry
& is -83.30% lower than the market/S&P 500 average
Average Returns/Yield of
HRL
Daily returns:
0.01%
Weekly returns:
0.07%
Monthly returns:
0.30%
Yearly returns:
8.42%
Comparison of returns:
Average annual returns/yield (last 3 years) is -57.78% below industry average
Classification:
HRL, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.83
Statistical test of Returns:
HRL has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
1.57%
Weekly Volatility:
3.50%
Monthly Volatility:
7.00%
Yearly Volatility:
24.26%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
2.76%
Volatility in last five trading days has been 75.97% above long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-3.20%
Weekly VaR:
-7.16%
Monthly VaR:
-14.31%
How Much Can the price of
HRL
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-12%
Worst case (decline):
-49.59%
This translates to price declining to:
$40.60
This translates to price declining to:
$23.39
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
HRL is a 1.03% riskier investment compared to the market/S&P 500 & is -13.45% less risky than Nasdaq(IXIC)
Risk (measured by volatility) is -31.55% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
HRL
Beta in relation to market/S&P 500--0.12
Expected beta in 1 year's time:
-
Expected beta in 3 year's time:
-
Unlevered (debt free) Beta:
0.086
Beta in relation to Nasdaq (XNAS):
0.228
Beta in relation to all global stocks::
0.333
Beta Comparison & Analysis
Beta of competitors/peers::
0.539
Beta is -78.07% lower than peers
Average Industry Beta:
0.586
Beta is -79.83% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
5.46%
Sustainable growth rate is -39.66% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.004
Alpha is -132.30% below industry average alpha yield
Alpha is -26% below the market average
Analysis of Cost of Capital of
HRL
Equity cost of capital:
0.040
Equity cost of capital is -44.72% below industry mean WACC
Unlevered (without debt) cost of capital:
2.88%
Before-tax cost of debt:
1.71%
After-tax cost of debt:
1.35%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.35%
WACC is -41.94% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$22.81
Revenue growth rate per share of (3Y):
3.57
Annual revenue growth rate is -52.15% below industry average
EPS:
$1.75
Expected Annual growth rate of EPS (3Y):
-2.62%
Expected future EPS growth rate is -114.52% lower than the Packaged Foods industry
Free cash flow (FCF) per share:
$1.72
Balance sheet equity growth per share: 32.20%
Equity growth rate per share is 563.26% higher than the industry
Debt per share
$6.06
EBITDA per share
$2.74
Valuation Analysis Today of
HRL
P/E Ratio:
25.41
P/E Ratio of Competitors/Peers:
19.46
P/E ratio is 30.60% higher than main peers & is -34.23% lower than the industry
Stock price/value with industry average P/E ratio: $67.62
HRL is -31.40% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $117.96
Present value of the expected future dividends only: $59.35
P/S (Price to Sales ratio):
2.03
Price to sales ratio is -12.31% below the industry mean
P/B (Price to book value ratio):
3.57
Price to free cash flow: 27.00
Price to free cash flow ratio is -0.90% lower than the industry
Net income growth rate (3Y):
-11.93%
Net income growth rate is -210.87% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 13.85%
Dividend yeild: 2.18%
Previous Dividend: $0.26
Previous adjusted dividend: $0.26
Previous Dividend: $1.01
Expected next dividend best case: $0.27
Expected next dividend worst case: $0.25
Average dividend payment (long-term): $0.24
Average dividend increase/decrease (growth rate) % per period: 2.22%
Expected next dividend payment date: 15/08/2022
Expected next dividend record date: 07/11/2022
Expected next dividend declaration date: 27/06/2022
Previous dividend payment date: 16/05/2022
Previous dividend record date: 04/11/2022
Previous dividend declaration date: 28/03/2022
Dividend History:
2022-04-08--$0.26
2021-10-15--$0.25
2021-04-09--$0.25
2022-01-14--$0.26
2021-07-09--$0.25
2021-01-08--$0.25
Dividend growth rate is -712.38% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
46.57%
Net debt to equity ratio:
35.09%
Debt to assets ratio:
25.80%
Net debt to assets ratio:
19.44%
Debt-to-asset ratio is -52.14% below industry average
Ability to repay debt:
Interest coverage ratio:
26.42
Interest coverage ratio is -89.29% less than industry average
Looking forward:
Debt growth rate:
542.45%
Annual debt growth is 95% higher than industry average debt growth rate
Debt repayment rate in last quarter: 0.07%
Analysis of Key Statistics
Correlation of price movement with the market:
0.347
Statistical significance of correlation:
HRL has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.429
Stock price is -19.19% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.429
Correlation of price movement with Nasdaq (^IXIC):
0.005
Covariance of price movement with the market:
0.004
Kurtosis
13.235
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
0.618
Returns are right (positive) skewed; mean returns are greater than median and mode returns
Fundamental Analysis & Dupont Analysis of
HRL
Gross Profit Margin Ratio:
67%
Operating Profit Margin Ratio:
9.79%
Operating profit margin is 102.79% higher than the industry
Net Profit Margin Ratio:
67%
Effective Tax Rate:
19.12%
Effective tax rate is -53.09% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
13.51%
Return on equity (ROE) is 22.27% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
7.48%
Return on assets (ROA) is 67.56% higher than the industry
Financial Leverage:
1.3x
Current Ratio:
2.19
Current ratio is -20.32% below industry average
Cash Conversion Cycle (days):
11.4
Cash conversion cycle is -76.80% below industry average
The remaining useful life of property plant & equipment is: 12.5 years
Stock based compensation to net income ratio:
-
In-depth Efficiency Analysis
Revenue generated per employee:
623.0K
Each employee generates -21% less revenue than industry average revenue per employee
EBITDA generated per employee:
74.7K
Each employee generates -34% less EBITDA than industry average revenue per employee
Profit generated per employee:
48.0K
Each employee generates -8% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
16.7K
Each employee generates -549% less free cash flow than industry average revenue per employee
Assets/Capital per employee
486.7K
Each employee generates -549% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
HRL
COCA-COLA EUROPACIFIC PARTNERS PLC (XNAS:CCEP)
CHURCH & DWIGHT CO., INC. (XNYS:CHD)
MCCORMICK & COMPANY, INCORPORATED (XNYS:MKC)
Mexican Economic Development, Inc. (XNYS:FMX)
KELLOGG COMPANY (XNYS:K)
BF-A
BF-B
THE CLOROX COMPANY (XNYS:CLX)
TYSON FOODS, INC. (XNYS:TSN)
Current Analyst Ratings
Strong buy�4%
Buy�4%
Hold�33%
Sell�4%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
5/1/22
Revenue:
12.46B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
10.37B
2.09B
-
-
907.36M
-
-
907.36M
24.26M
56.59M
251.54M
1.49B
1.22B
959.84M
1.19B
227.03M
959.84M
Statement of Cash Flow
Date:
Period:
64.28M
Differed Income Tax :
-
Stock Based Compensation :
-
Change in Working Capital :
54.38M
Accounts Receivables:
-
Other Working Capital:
- 2533.00K
Other Non-Cash Items:
25.52M
Net Cash Provided by Operating Activities:
383.76M
Investments in PP&E:
- 49359.00K
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
1/30/22
2022
Q1
824.43M
22.19M
846.63M
820.41M
1.39B
40.61M
3.09B
2.10B
4.93B
1.82B
286.49M
-
600.03M
9.73B
-
12.83B
799.37M
8.83M
89.13M
-
607.14M
1.42B
3.31B
714.69M
4.31B
-
5.72B
-
-
- 265524.0K
-
January 30, 2022 at 7:00:00 AM
11.27B
7.11B
12.83B
308.69M
3.32B
2.5B
-
- 321.00K
- 49680.00K
- 2163.00K
-
-
- 132909.00K
11.05M
- 124019.00K
846.00K
210.90M
824.43M
613.53M
383.76M
- 49359.00K
334.40M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
HRL
2023
2024
2025
2026
2027
$48.34
$48.73
$49.11
$49.50
$49.90