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.
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.
valuetradeblog 
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
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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?
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