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Can Hormel Foods' International & Foodservice Offset Retail Weakness?
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Key Takeaways
Hormel Foods' Foodservice and International segments helped offset weaker Retail in Q1.
HRL's Foodservice sales rose 7% with 13% profit growth, driven by pricing and strong demand.
Hormel's Retail sales fell 2% and profit dropped 19% amid weak demand and higher costs.
Hormel Foods Corporation (HRL - Free Report) is leaning heavily on its International and Foodservice businesses to counterbalance a weak Retail performance and first-quarter fiscal 2026 results suggest that this strategy is working, though not fully closing the gap.
The Foodservice segment remained a key growth driver in the quarter. Foodservice net sales increased 7%, marking the 10th consecutive quarter of organic growth, while segment profit rose 13%. This performance was supported by broad-based demand across channels, particularly in customized solutions, premium prepared proteins and branded offerings. Pricing actions, aligned with market conditions, also contributed to profit growth, even as volumes remained flat, reflecting a favorable mix and disciplined execution.
The International segment added further momentum. International net sales climbed 8%, with segment profit up 10% year over year. Growth was driven by strong branded exports, led by SPAM, along with improving demand in China and other key markets. Lower SG&A expenses also supported profitability, partially offsetting some pressure on export margins and reinforcing the segment’s role as a steady contributor.
The challenge, however, sits squarely in Retail, with net sales declining 2% and volume falling 6%, reflecting both softer demand and the company’s strategic exit from select lower-margin private-label products. Segment profit dropped 19%, pressured by lower sales as well as elevated input and logistics costs. Continued weakness in packaged deli categories and a cautious consumer backdrop further weighed on performance.
Taken together, growth in the International and Foodservice segments provided support to this Zacks Rank #2 (Buy) company’s overall performance in the quarter. However, continued volume declines and margin pressure in Retail suggest that the degree of offset will depend on the sustainability of growth and pricing trends in these segments.
Hormel Foods’ Share Price Performance
Although shares of Hormel Foods have declined 8.3% over the past six months, they have outperformed the industry, which fell 19.4% during the same period.
HRL Stock's Past 6 Months’ 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 15.32 compared with the industry average of 12.05. 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.
The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 39.9% and 44.4%, respectively, from the year-ago figures. Mama's Creations delivered a trailing four-quarter earnings surprise of 133.3%, on average.
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 holds a Zacks Rank #2 at present. HSY delivered a trailing four-quarter earnings surprise of 17.2%, on average.
The Zacks Consensus Estimate for Hershey’s current financial-year sales and earnings indicates growth of 4.8% and 30.1%, respectively, from the prior-year reported levels.
US Foods Holding Corp. (USFD - Free Report) engages in the marketing, sale and distribution of fresh, frozen and dry food and non-food products to foodservice customers in the United States. USFD currently carries a Zacks Rank #2. US Foods Holding delivered a trailing four-quarter earnings surprise of 2.2%, on average.
The Zacks Consensus Estimate for US Foods Holding’s current fiscal-year sales and earnings implies growth of 5.4% and 20.9%, respectively, from the year-ago figures.
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Can Hormel Foods' International & Foodservice Offset Retail Weakness?
Key Takeaways
Hormel Foods Corporation (HRL - Free Report) is leaning heavily on its International and Foodservice businesses to counterbalance a weak Retail performance and first-quarter fiscal 2026 results suggest that this strategy is working, though not fully closing the gap.
The Foodservice segment remained a key growth driver in the quarter. Foodservice net sales increased 7%, marking the 10th consecutive quarter of organic growth, while segment profit rose 13%. This performance was supported by broad-based demand across channels, particularly in customized solutions, premium prepared proteins and branded offerings. Pricing actions, aligned with market conditions, also contributed to profit growth, even as volumes remained flat, reflecting a favorable mix and disciplined execution.
The International segment added further momentum. International net sales climbed 8%, with segment profit up 10% year over year. Growth was driven by strong branded exports, led by SPAM, along with improving demand in China and other key markets. Lower SG&A expenses also supported profitability, partially offsetting some pressure on export margins and reinforcing the segment’s role as a steady contributor.
The challenge, however, sits squarely in Retail, with net sales declining 2% and volume falling 6%, reflecting both softer demand and the company’s strategic exit from select lower-margin private-label products. Segment profit dropped 19%, pressured by lower sales as well as elevated input and logistics costs. Continued weakness in packaged deli categories and a cautious consumer backdrop further weighed on performance.
Taken together, growth in the International and Foodservice segments provided support to this Zacks Rank #2 (Buy) company’s overall performance in the quarter. However, continued volume declines and margin pressure in Retail suggest that the degree of offset will depend on the sustainability of growth and pricing trends in these segments.
Hormel Foods’ Share Price Performance
Although shares of Hormel Foods have declined 8.3% over the past six months, they have outperformed the industry, which fell 19.4% during the same period.
HRL Stock's Past 6 Months’ 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 15.32 compared with the industry average of 12.05. 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
Other Stocks to Consider
Mama's Creations, Inc. (MAMA - Free Report) manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 39.9% and 44.4%, respectively, from the year-ago figures. Mama's Creations delivered a trailing four-quarter earnings surprise of 133.3%, on average.
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 holds a Zacks Rank #2 at present. HSY delivered a trailing four-quarter earnings surprise of 17.2%, on average.
The Zacks Consensus Estimate for Hershey’s current financial-year sales and earnings indicates growth of 4.8% and 30.1%, respectively, from the prior-year reported levels.
US Foods Holding Corp. (USFD - Free Report) engages in the marketing, sale and distribution of fresh, frozen and dry food and non-food products to foodservice customers in the United States. USFD currently carries a Zacks Rank #2. US Foods Holding delivered a trailing four-quarter earnings surprise of 2.2%, on average.
The Zacks Consensus Estimate for US Foods Holding’s current fiscal-year sales and earnings implies growth of 5.4% and 20.9%, respectively, from the year-ago figures.