Adam Samuelson, an analyst from Goldman Sachs, maintained the Sell rating on Hormel Foods (HRL – Research Report). The associated price target remains the same with $28.00.
Adam Samuelson has given his Sell rating due to a combination of factors pertaining to Hormel Foods’ valuation and market performance. Samuelson acknowledges that Hormel Foods’ earnings per share (EPS) are not expected to fall short for the quarter. However, he highlights that the stock is trading at a significant premium compared to its peers in the US packaged food sector. This premium is unwarranted given the company’s below-average growth and profit margins. Additionally, he notes that certain segments of Hormel Foods, particularly the integrated turkey operations, are subject to considerable earnings volatility linked to commodity prices.
Furthermore, Samuelson points to alternatives within the same sector that present more attractive investment opportunities. He compares Hormel Foods to Buy-rated larger-cap peers that offer superior margins, growth, and returns, while also trading at a more favorable price-to-earnings ratio. These peers, according to Samuelson, have substantial exposure to foodservice and away-from-home markets, which are considered positive attributes in the current environment. Maintaining a price target of $28, Samuelson’s Sell rating is a reflection of these comparative analyses and Hormel Foods’ inflated valuation in relation to its market performance and growth prospects.
Based on the recent corporate insider activity of 57 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of HRL in relation to earlier this year.
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Hormel Foods (HRL) Company Description:
Founded in 1891, Hormel Foods Corp. is a Minnesota-based food company, which produces and markets various meat and food products to retail, food service, deli, and commercial customers. It operates through the following four segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other.
