We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Acquisitions Aid Hormel Foods' (HRL), Pandemic-Led Costs Hurt
Read MoreHide Full Article
Hormel Foods Corporation (HRL - Free Report) is benefiting from focus on strategic acquisitions and other efforts to enhance capacity. Moreover, strength in its brands and product innovations is yielding. That being said, the company’s foodservice business is seeing softness owing to the coronavirus outbreak. Also, Hormel Foods is grappling with escalated costs. Let’s take a closer look.
What’s Working in Hormel Foods’ Favor?
Hormel Foods intends to strengthen its business on the back of strategic acquisitions. On Feb 11, 2021, the company announced plans to acquire Planters snack nuts business from The Kraft Heinz Company (KHC - Free Report) . The acquisition of the Planters business is in tandem with the company’s efforts to expand presence in the fast-growing snacking space. Further, Hormel Foods acquired a Texas-based pit-smoked meats company, Sadler's Smokehouse (March 2020). The buyout is in sync with the company’s initiatives to strengthen its position in the foodservice space.
Along with prudent acquisitions, Hormel Foods is on track with other strategic investments for boosting capacity. Notably, the company incurred capital expenditures of $40 million in the first quarter of fiscal 2021. During the quarter, management commenced its Burke pizza toppings plant expansion. In its last earnings call, management highlighted that it is focusing on expanding the capacity of its pepperoni business. In December 2020, the company announced the opening of a new manufacturing plant — Papillion Foods — situated in Papillion, NE. Incidentally, management expects to incur capital expenditures of $260 million in fiscal 2021.
Further, Hormel Foods’ focus on innovation is yielding results. In recent endeavors, the company introduced the Hormel pretzel bites and cheese tray — a new addition to the Hormel Gatherings line. The launch is appropriate during the increasing home-based working and schooling trend, as well as smaller get-togethers amid COVID-19.
In December 2020, the company introduced its new plant-based protein puffs under the Happy Little Plants brand line-up. With rising health consciousness, plant-based food alternatives are gaining prominence. This provides opportunities for companies like Hormel Foods to diversify and expand. The company has been making strategic advertisement investments to support growth of its brands. Additionally, it focuses on launching products to meet consumers’ preferences.
Is All Rosy for Hormel Foods?
Hormel Foods has been seeing declines in its foodservice business amid the pandemic. This could be attributed to reduced demand from various foodservice venues like college and universities in the wake of COVID-induced social distancing. During the first quarter of fiscal 2021, net sales in U.S. foodservice channel declined 17% year over year. Moreover, escalated costs associated with COVID-19 are a matter of concern for the company. During the fiscal first quarter, it absorbed nearly $15 million in direct incremental supply-chain costs mainly induced by lower production volumes and better safety measures in its manufacturing facilities amid the pandemic.In fact, management expects these temporary costs to decline only after COVID-19 subsides.
That being said, let’s see if the company’s growth endeavors like innovations and capacity enhancement efforts can help it stay afloat amid such headwinds. Shares of this Zacks Rank #3 (Hold) company have gained 3.8% in the past three months compared with the industry’s 10.3% growth.
Pilgrim’s Pride Corporation (PPC - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 24.2%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Image: Bigstock
Acquisitions Aid Hormel Foods' (HRL), Pandemic-Led Costs Hurt
Hormel Foods Corporation (HRL - Free Report) is benefiting from focus on strategic acquisitions and other efforts to enhance capacity. Moreover, strength in its brands and product innovations is yielding. That being said, the company’s foodservice business is seeing softness owing to the coronavirus outbreak. Also, Hormel Foods is grappling with escalated costs. Let’s take a closer look.
What’s Working in Hormel Foods’ Favor?
Hormel Foods intends to strengthen its business on the back of strategic acquisitions. On Feb 11, 2021, the company announced plans to acquire Planters snack nuts business from The Kraft Heinz Company (KHC - Free Report) . The acquisition of the Planters business is in tandem with the company’s efforts to expand presence in the fast-growing snacking space. Further, Hormel Foods acquired a Texas-based pit-smoked meats company, Sadler's Smokehouse (March 2020). The buyout is in sync with the company’s initiatives to strengthen its position in the foodservice space.
Along with prudent acquisitions, Hormel Foods is on track with other strategic investments for boosting capacity. Notably, the company incurred capital expenditures of $40 million in the first quarter of fiscal 2021. During the quarter, management commenced its Burke pizza toppings plant expansion. In its last earnings call, management highlighted that it is focusing on expanding the capacity of its pepperoni business. In December 2020, the company announced the opening of a new manufacturing plant — Papillion Foods — situated in Papillion, NE. Incidentally, management expects to incur capital expenditures of $260 million in fiscal 2021.
Further, Hormel Foods’ focus on innovation is yielding results. In recent endeavors, the company introduced the Hormel pretzel bites and cheese tray — a new addition to the Hormel Gatherings line. The launch is appropriate during the increasing home-based working and schooling trend, as well as smaller get-togethers amid COVID-19.
In December 2020, the company introduced its new plant-based protein puffs under the Happy Little Plants brand line-up. With rising health consciousness, plant-based food alternatives are gaining prominence. This provides opportunities for companies like Hormel Foods to diversify and expand. The company has been making strategic advertisement investments to support growth of its brands. Additionally, it focuses on launching products to meet consumers’ preferences.
Is All Rosy for Hormel Foods?
Hormel Foods has been seeing declines in its foodservice business amid the pandemic. This could be attributed to reduced demand from various foodservice venues like college and universities in the wake of COVID-induced social distancing. During the first quarter of fiscal 2021, net sales in U.S. foodservice channel declined 17% year over year. Moreover, escalated costs associated with COVID-19 are a matter of concern for the company. During the fiscal first quarter, it absorbed nearly $15 million in direct incremental supply-chain costs mainly induced by lower production volumes and better safety measures in its manufacturing facilities amid the pandemic.In fact, management expects these temporary costs to decline only after COVID-19 subsides.
That being said, let’s see if the company’s growth endeavors like innovations and capacity enhancement efforts can help it stay afloat amid such headwinds. Shares of this Zacks Rank #3 (Hold) company have gained 3.8% in the past three months compared with the industry’s 10.3% growth.
Better-Ranked Food Bets
Sanderson Farms, Inc. , currently sporting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 43.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pilgrim’s Pride Corporation (PPC - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 24.2%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.
Click here for the 4 trades >>