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HRL's Pricing and Cost Actions to Support Margins in FY26
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Key Takeaways
Hormel Foods guides to FY26 adjusted EPS of $1.43-$1.51, implying 4-10% growth.
HRL sees Q1 earnings decline on pricing delays, avian flu supply issues and cost savings lag.
Hormel Foods expects pricing benefits, 9% role cuts and efficiencies to lift FY26 visibility.
Hormel Foods Corporation (HRL - Free Report) moves into fiscal 2026 with a better line of sight into its earnings trajectory after a challenging close to fiscal 2025. Management expects transitional headwinds early in the year but sees improving visibility as structural cost actions and pricing benefits gain traction.
Near-term visibility remains somewhat constrained. Management expects first-quarter earnings to decline year over year, pressured by delayed realization of pricing actions, lingering supply constraints tied to avian influenza and the timing lag of administrative cost savings. These factors are largely transitional, reflecting carryover effects from fiscal 2025 rather than new structural headwinds.
Beyond the first quarter, earnings visibility improves meaningfully. On its fourth-quarter fiscal 2025 earnings call, the company has guided to adjusted earnings per share of $1.43 to $1.51 for fiscal 2026, implying 4% to 10% growth. The outlook assumes organic net sales growth of 1% to 4%, top-line growth across each reporting segment and stronger brand investment levels.
The earnings framework is supported by the full-year benefit of pricing actions implemented during fiscal 2025, continued productivity gains from the Transform and Modernize initiative and savings from a recently announced corporate restructuring program aimed at reducing administrative expenses. Management noted that gross margin expansion is expected to be driven by pricing realization, mix improvements and productivity gains, while acknowledging that commodity costs, particularly beef, are expected to remain elevated relative to historical averages.
Although the outlook assumes a pressured consumer environment and certain input costs are expected to remain elevated relative to historical norms, the company’s fiscal 2026 earnings framework indicates the anticipated impact of pricing realization, cost control measures and ongoing operational efficiency initiatives.
Shares of this Zacks Rank #3 (Hold) company have lost 1.8% in the past month against the broader Consumer Staples sector and the industry’s growth of 9.8% and 3.9%, respectively. HRL has outperformed the S&P 500 index’s decline of 1.9% during the same period.
HRL Stock's Past Month Performance
Image Source: Zacks Investment Research
Is Hormel Foods a Value Play Stock?
Hormel Foods currently trades at a forward 12-month P/E ratio of 15.94 compared with the industry average of 13.18. This valuation places the stock at a premium relative to peers, indicating broader market expectations around its business stability and ability to navigate current cost and demand dynamics.
HRL Valuation Picture
Image Source: Zacks Investment Research
Stocks to Consider
The Hershey Company (HSY - Free Report) engages in the manufacture and sale of confectionery products and pantry items in the United States and internationally. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Hershey’s current financial-year sales and earnings indicates growth of 4.4% and 27.1%, respectively, from the prior-year reported levels. HSY delivered a trailing four-quarter earnings surprise of 17.2%, on average.
The Simply Good Foods Company (SMPL - Free Report) , a consumer-packaged food and beverage company, engages in the development, marketing and sale of snacks and meal replacements and other products in North America and internationally. It flaunts a Zacks Rank #1 at present. SMPL delivered a trailing four-quarter earnings surprise of 5.5%, on average.
The Zacks Consensus Estimate for Simply Good Foods’ current fiscal-year earnings implies growth of 1.6%, from the year-ago figures.
Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) operates as a retailer of closeout merchandise and excess inventory in the United States. OLLI currently has a Zacks Rank #2 (Buy). Ollie's Bargain delivered a trailing four-quarter earnings surprise of 5.2%, on average.
The Zacks Consensus Estimate for Ollie's Bargain’s fiscal 2025 sales and earnings implies growth of 16.7% and 17.7%, respectively, from the previous year’s reported numbers.
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HRL's Pricing and Cost Actions to Support Margins in FY26
Key Takeaways
Hormel Foods Corporation (HRL - Free Report) moves into fiscal 2026 with a better line of sight into its earnings trajectory after a challenging close to fiscal 2025. Management expects transitional headwinds early in the year but sees improving visibility as structural cost actions and pricing benefits gain traction.
Near-term visibility remains somewhat constrained. Management expects first-quarter earnings to decline year over year, pressured by delayed realization of pricing actions, lingering supply constraints tied to avian influenza and the timing lag of administrative cost savings. These factors are largely transitional, reflecting carryover effects from fiscal 2025 rather than new structural headwinds.
Beyond the first quarter, earnings visibility improves meaningfully. On its fourth-quarter fiscal 2025 earnings call, the company has guided to adjusted earnings per share of $1.43 to $1.51 for fiscal 2026, implying 4% to 10% growth. The outlook assumes organic net sales growth of 1% to 4%, top-line growth across each reporting segment and stronger brand investment levels.
The earnings framework is supported by the full-year benefit of pricing actions implemented during fiscal 2025, continued productivity gains from the Transform and Modernize initiative and savings from a recently announced corporate restructuring program aimed at reducing administrative expenses. Management noted that gross margin expansion is expected to be driven by pricing realization, mix improvements and productivity gains, while acknowledging that commodity costs, particularly beef, are expected to remain elevated relative to historical averages.
Although the outlook assumes a pressured consumer environment and certain input costs are expected to remain elevated relative to historical norms, the company’s fiscal 2026 earnings framework indicates the anticipated impact of pricing realization, cost control measures and ongoing operational efficiency initiatives.
Hormel Foods’ Zacks Rank & Share Price Performance
Shares of this Zacks Rank #3 (Hold) company have lost 1.8% in the past month against the broader Consumer Staples sector and the industry’s growth of 9.8% and 3.9%, respectively. HRL has outperformed the S&P 500 index’s decline of 1.9% during the same period.
HRL Stock's Past Month Performance
Image Source: Zacks Investment Research
Is Hormel Foods a Value Play Stock?
Hormel Foods currently trades at a forward 12-month P/E ratio of 15.94 compared with the industry average of 13.18. This valuation places the stock at a premium relative to peers, indicating broader market expectations around its business stability and ability to navigate current cost and demand dynamics.
HRL Valuation Picture
Image Source: Zacks Investment Research
Stocks to Consider
The Hershey Company (HSY - Free Report) engages in the manufacture and sale of confectionery products and pantry items in the United States and internationally. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Hershey’s current financial-year sales and earnings indicates growth of 4.4% and 27.1%, respectively, from the prior-year reported levels. HSY delivered a trailing four-quarter earnings surprise of 17.2%, on average.
The Simply Good Foods Company (SMPL - Free Report) , a consumer-packaged food and beverage company, engages in the development, marketing and sale of snacks and meal replacements and other products in North America and internationally. It flaunts a Zacks Rank #1 at present. SMPL delivered a trailing four-quarter earnings surprise of 5.5%, on average.
The Zacks Consensus Estimate for Simply Good Foods’ current fiscal-year earnings implies growth of 1.6%, from the year-ago figures.
Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) operates as a retailer of closeout merchandise and excess inventory in the United States. OLLI currently has a Zacks Rank #2 (Buy). Ollie's Bargain delivered a trailing four-quarter earnings surprise of 5.2%, on average.
The Zacks Consensus Estimate for Ollie's Bargain’s fiscal 2025 sales and earnings implies growth of 16.7% and 17.7%, respectively, from the previous year’s reported numbers.