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Why Hormel Foods is a Must-Add Stock to Your Portfolio?
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The equity universe is bullish at the moment, recording post-election gains of 5.6%, 5.3% and 8.6% for the S&P 500, Nasdaq and Dow Jones Industrial Average, respectively.
President-elect Donald Trump’s promises to boost government spending and slash taxes, along with steady job growth of the U.S. market is likely to benefit the consumer staples stock.
Notably, per The Conference Board, the Consumer Confidence Index increased from 109.4, in November, to 113.7, this month, hitting the highest level since 2001. (read more: 5 Stocks to Buy on 15-Year High Consumer Confidence)
Among the numerous potential gainers, adding Hormel Foods Corporation (HRL - Free Report) to your portfolio would likely be a promising move.
Over the last one month, Hormel’s shares recorded a return of 1.78%. However, we believe that this Zacks Rank #2 (Buy) stock has gathered enough momentum to pull up its return in the near term. This, in turn, would eventually help the company provide return at par or even beyond the Zacks categorized Consumer Staples sector’s return of 2.97%.
Notably, the attractiveness of this stock as a current investment choice is further accentuated by its favorable Growth Style Score ‘A’.
Reasons for the Solid Run
Revenue Growth: In fiscal 2016, Hormel’s aggregate sales jumped 29.1% year over year. The company anticipates accruing organic growth of 5% in fiscal 2017.
Consumers’ loyalty toward the popular brands of the company, such as Skippy, Spam, Applegate deli meats, Hormel Bacon and Jennie-O branded foodservice products, are expected to bolster revenues in the quarters ahead. Additionally, sturdy marketing programs of Hormel, including the Make The Switch campaign, would likely drive the near-term sales.
Margin Improvement: Margin growth has remained impressive for Hormel for the few trailing quarters. The company’s gross profit margin expanded 220 basis points (bps), year over year, in fourth-quarter fiscal 2016, on the back of improved operational efficacy, lower input prices and absence of the Avian Influenza impact.
Earnings per Share Growth: Hormel posted a positive average earnings surprise of 6.30%, over the last four quarters. The company is augmenting its bottom line, supported by sturdy revenue growth and improved margin. Hormel projects earnings within the range of $1.71–$1.77 in fiscal 2017, after including the earnings of 3 cents per share from the divested Farmer John business. The range represents a 4–8% year-over-year increment in earnings.
Upward Estimate Revisions: Over the past 60 days, the Zacks Consensus Estimate for Hormel moved up 2.4% to $1.69 for fiscal 2017 and 6.3% to $1.70 for fiscal 2018. The positive earnings estimate revisions indicate positive market sentiments and substantiate the Zacks Rank #2 for the stock.
Notably, the stock’s projected earnings per share (‘EPS’) growth (F1/F0) is currently pegged at 3.05%.
Acquisitions & Restructuring Moves: Hormel intends to achieve 15% top-line and 10% bottom-line growth by 2020, benefiting from higher innovation and strategic growth programs; including new acquisitions as well as divestitures. For instance, the acquisition of Justin’s LCC. (May 2016) has been bolstering Hormel Foods’ Grocery Products’ sales. Further, the company recently (Nov 2016) sold its Saag’s and Farmer John meat brands and three farming operations to Smithfield. Hormel would utilize the divestiture proceeds to fund new growth projects for its food products business.
Commitment Toward Shareholders: Hormel tries to provide higher returns to its shareholders through lucrative dividend offers. On Nov 21, 2016, the company declared a 17% hike in its annual dividend, making the 51st successive annual dividend upsurge. Thereby, this raised its common stock based annual dividend to 68 cents per share from 58 cents per share.
Key Picks
Some other favorably placed stocks in the industry include Dean Foods Company , Francesca's Holdings Corporation and Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) . All these three stocks currently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Dean Foods Company has an average positive earnings surprise of 5.44%, for the last four quarters.
Francesca's Holdings Corporation’s positive earnings surprise is 26.55% for the trailing four quarters.
Ollie's Bargain Outlet Holdings, Inc.’s positive earnings surprise is 17.64% for the last four quarters.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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Why Hormel Foods is a Must-Add Stock to Your Portfolio?
The equity universe is bullish at the moment, recording post-election gains of 5.6%, 5.3% and 8.6% for the S&P 500, Nasdaq and Dow Jones Industrial Average, respectively.
President-elect Donald Trump’s promises to boost government spending and slash taxes, along with steady job growth of the U.S. market is likely to benefit the consumer staples stock.
Notably, per The Conference Board, the Consumer Confidence Index increased from 109.4, in November, to 113.7, this month, hitting the highest level since 2001. (read more: 5 Stocks to Buy on 15-Year High Consumer Confidence)
Among the numerous potential gainers, adding Hormel Foods Corporation (HRL - Free Report) to your portfolio would likely be a promising move.
Over the last one month, Hormel’s shares recorded a return of 1.78%. However, we believe that this Zacks Rank #2 (Buy) stock has gathered enough momentum to pull up its return in the near term. This, in turn, would eventually help the company provide return at par or even beyond the Zacks categorized Consumer Staples sector’s return of 2.97%.
Notably, the attractiveness of this stock as a current investment choice is further accentuated by its favorable Growth Style Score ‘A’.
Reasons for the Solid Run
Revenue Growth: In fiscal 2016, Hormel’s aggregate sales jumped 29.1% year over year. The company anticipates accruing organic growth of 5% in fiscal 2017.
Consumers’ loyalty toward the popular brands of the company, such as Skippy, Spam, Applegate deli meats, Hormel Bacon and Jennie-O branded foodservice products, are expected to bolster revenues in the quarters ahead. Additionally, sturdy marketing programs of Hormel, including the Make The Switch campaign, would likely drive the near-term sales.
Margin Improvement: Margin growth has remained impressive for Hormel for the few trailing quarters. The company’s gross profit margin expanded 220 basis points (bps), year over year, in fourth-quarter fiscal 2016, on the back of improved operational efficacy, lower input prices and absence of the Avian Influenza impact.
Earnings per Share Growth: Hormel posted a positive average earnings surprise of 6.30%, over the last four quarters. The company is augmenting its bottom line, supported by sturdy revenue growth and improved margin. Hormel projects earnings within the range of $1.71–$1.77 in fiscal 2017, after including the earnings of 3 cents per share from the divested Farmer John business. The range represents a 4–8% year-over-year increment in earnings.
Upward Estimate Revisions: Over the past 60 days, the Zacks Consensus Estimate for Hormel moved up 2.4% to $1.69 for fiscal 2017 and 6.3% to $1.70 for fiscal 2018. The positive earnings estimate revisions indicate positive market sentiments and substantiate the Zacks Rank #2 for the stock.
Notably, the stock’s projected earnings per share (‘EPS’) growth (F1/F0) is currently pegged at 3.05%.
Acquisitions & Restructuring Moves: Hormel intends to achieve 15% top-line and 10% bottom-line growth by 2020, benefiting from higher innovation and strategic growth programs; including new acquisitions as well as divestitures. For instance, the acquisition of Justin’s LCC. (May 2016) has been bolstering Hormel Foods’ Grocery Products’ sales. Further, the company recently (Nov 2016) sold its Saag’s and Farmer John meat brands and three farming operations to Smithfield. Hormel would utilize the divestiture proceeds to fund new growth projects for its food products business.
Commitment Toward Shareholders: Hormel tries to provide higher returns to its shareholders through lucrative dividend offers. On Nov 21, 2016, the company declared a 17% hike in its annual dividend, making the 51st successive annual dividend upsurge. Thereby, this raised its common stock based annual dividend to 68 cents per share from 58 cents per share.
Key Picks
Some other favorably placed stocks in the industry include Dean Foods Company , Francesca's Holdings Corporation and Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) . All these three stocks currently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Dean Foods Company has an average positive earnings surprise of 5.44%, for the last four quarters.
Francesca's Holdings Corporation’s positive earnings surprise is 26.55% for the trailing four quarters.
Ollie's Bargain Outlet Holdings, Inc.’s positive earnings surprise is 17.64% for the last four quarters.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>