Hormel Foods 2Q 2016

Hormel Foods Corporation is an American food company based in Austin, Minnesota. Hormel sells food under many brands, including the Chi-Chi’s, Dinty Moore, Farmer John, Herdez, Muscle Milk, Jennie-O and many more.

From the Hormel Foods 2Q 2016 report

The company reported fiscal 2016 second quarter record net earnings of $215.4 million, up 20 percent from net earnings of $180.2 million last year. Diluted earnings per share for the quarter were $0.40, up 21 percent from $0.33 last year. Sales for the quarter were $2.3 billion, up 1 percent from last year.

The stock lost about 8,5% on that news – wall street is a crazy planet.

I played around with some numbers. I am calculating with an EPS of 2,11 US$ for 2020 which is a very conservative assumption. Considering a PE-ratio of 16 (decreasing ratio, this could be wrong) in the future the stock would sell at 33,76 US$ in year 2020 – which is lower than now.

Hormel 2Q16

 Effective May 16, 2016, the company paid its 351st consecutive quarterly dividend, at the annual rate of $0.58.

At 35,48 USD for the share the dividend yield is at 1,6%

Hormel Foods is without questions a high-quality business but for me it is selling at a to high price, even after the drop yesterday.

 

Disclaimer: The content contained on this site represents only the opinions of its author(s). I may hold a position in securities mentioned on this site. In no way should anything on this website be considered investment advice and should never be relied on in making an investment decision. As always please do your own research!
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2 thoughts on “Hormel Foods 2Q 2016

  1. Looks like a decent company, I think it’s pretty hard to say how much a growing company is worth in a few years time, but I think you’ve done a good job with your own calculations that you’re not comfortable with the current price.

    Tristan

    Like

  2. Hi Tristan,

    thanks for the comment. Yes, Hormel is definitely a nice company with a good management.
    I often calculate the growth rates to conservative and miss out the big growers. Maybe this is something to change in my approach?

    Like

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