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Hormel Foods' Q2 Earnings Beat, Sales Gain on Segment Strength
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Key Takeaways
HRL beat Q2 estimates with 40 cents adjusted EPS and $3.0B sales, up 2.5% year over year.
HRL's Retail profit jumped 13.5% as the turkey network improved and Jennie-O ground turkey stayed strong.
HRL sold its whole-bird turkey business, reaffirmed FY26 outlook and expects $50M lower reported sales.
Hormel Foods Corporation (HRL - Free Report) reported second-quarter fiscal 2026 results, wherein both top and bottom lines increased year over year and surpassed the Zacks Consensus Estimate. The company benefited from organic top-line growth, favorable pricing actions, improved turkey network performance and gains across all three segments.
HRL’s Quarterly Results: Key Metrics & Insights
Hormel Foods posted adjusted earnings of 40 cents per share, which beat the Zacks Consensus Estimate as well as the year-ago period’s adjusted figure of 35 cents.
Hormel Foods Corporation Price, Consensus and EPS Surprise
Net sales of $2,972.6 million increased 2.5% from $2,898.8 million reported in the year-ago quarter. The metric surpassed the consensus mark of $2,944 million. Organic net sales increased 3.3% in the quarter, marking the company’s sixth consecutive quarter of organic top-line growth. Total volume declined 1.2%, while organic volume fell 0.8%.
Hormel Foods’ adjusted gross profit was $519.9 million, up from $487.2 million reported in the year-ago quarter. Adjusted selling, general and administrative expenses were $243.4 million for the quarter compared with $237.7 million in the year-ago period.
Adjusted operating income was $293.7 million, up from $264.9 million in the same quarter last year. Adjusted operating margin expanded to 9.9% from 9.1% reported in the year-ago quarter.
HRL Provides Revenue & Profit Insights by Segment
Net sales in the Retail unit increased 0.3% year over year to $1,789.7 million, while organic net sales rose 1.4%. Volume declined 2.1%, with organic volume down 1.6%, mainly due to the strategic exit from select non-core private-label snack nut items. The segment benefited from strong performance in Jennie-O ground turkey, along with contributions from Applegate natural and organic meats, Hormel Black Label bacon, the Herdez portfolio and Hormel Gatherings party trays.
Segment profit rose 13.5%, driven by higher organic net sales, improved performance across the turkey manufacturing network and lower SG&A expenses, partly offset by inflationary pressures in the logistics network.
Net sales in the Foodservice segment jumped 6.4% to $996.7 million, while organic net sales rose 6.6%. Volume increased 0.7%, with organic volume up 0.8%. The segment marked its 11th consecutive quarter of organic net sales growth, driven by broad-based strength across multiple product groups and categories, including customized solutions, branded pepperoni and premium prepared proteins.
Segment profit increased 10.8%, aided by market-based pricing actions, modest volume growth and improved turkey network performance.
Net sales in the International unit improved 4.3% year over year to $186.2 million, while organic net sales grew 4.6%. Volume and organic volume increased 1.3%, supported by strong branded exports led by SPAM luncheon meat and continued growth in the company’s China business.
Segment profit gained 20.3%, reflecting strong export performance and growth in China.
Hormel Foods’ Financial Health Snapshot
The company ended the quarter with cash and cash equivalents of $826.8 million, and long-term debt (excluding current maturities) of $2.4 billion.
In the fiscal second quarter, cash flow from operations totaled $178.9 million. Capital expenditures were $82.2 million, mainly related to investments in data and technology and infrastructure enhancements.
Hormel Foods returned $161 million to shareholders through dividends during the quarter.
Strategic Updates From HRL
During the quarter, Hormel Foods completed the previously announced sale of its whole-bird turkey business as part of its portfolio-shaping strategy. The divestiture supports the company’s focus on expanding its value-added protein portfolio and reducing exposure to more volatile commodity-driven businesses.
Management expects the transaction to reduce fiscal 2026 reported net sales by approximately $50 million, with minimal impact on adjusted diluted earnings per share.
What to Expect From HRL in the Future?
Hormel Foods reaffirmed fiscal 2026 net sales guidance in the range of $12.2-$12.5 billion and continues to expect organic net sales growth of 1-4%.
The company reaffirmed adjusted operating income guidance in the range of $1.06-$1.12 billion, implying growth of 4-10%. Adjusted diluted earnings per share are still expected in the range of $1.43-$1.51, calling for growth of 4-10%.
Management remains confident about delivering its full-year outlook, supported by continued momentum across all three segments, a favorable portfolio mix and ongoing operational improvements.
This Zacks Rank #4 (Sell) stock has tumbled 15.6% over the past three months compared with the industry’s decline of 8.5%.
The Zacks Consensus Estimate for The Chef's Warehouse’s current financial-year sales and earnings indicates growth of 8.3% and 24.7%, respectively, from the prior-year reported levels. CHEF delivered a trailing four-quarter earnings surprise of 28.9%, on average.
Tyson Foods, Inc. (TSN - Free Report) operates as a leading protein company, producing chicken, beef, pork and prepared food products. TSN currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Tyson Foods’ current fiscal-year sales calls for growth of 4.5%, while the consensus mark for earnings indicates a 0.5% increase from the year-ago reported figures. TSN delivered a trailing four-quarter earnings surprise of 18.1%, on average.
Flowers Foods, Inc. (FLO - Free Report) is a leading U.S. bakery company that manufactures and markets packaged bakery foods, including bread, buns, snack cakes and tortillas, under brands such as Nature’s Own, Wonder and Dave’s Killer Bread. FLO carries a Zacks Rank #2.
The Zacks Consensus Estimate for Flowers Foods’ current and next fiscal-year EPS has seen upward revisions by 5.6% and 11.9%, respectively, over the past 60 days.
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Hormel Foods' Q2 Earnings Beat, Sales Gain on Segment Strength
Key Takeaways
Hormel Foods Corporation (HRL - Free Report) reported second-quarter fiscal 2026 results, wherein both top and bottom lines increased year over year and surpassed the Zacks Consensus Estimate. The company benefited from organic top-line growth, favorable pricing actions, improved turkey network performance and gains across all three segments.
HRL’s Quarterly Results: Key Metrics & Insights
Hormel Foods posted adjusted earnings of 40 cents per share, which beat the Zacks Consensus Estimate as well as the year-ago period’s adjusted figure of 35 cents.
Hormel Foods Corporation Price, Consensus and EPS Surprise
Hormel Foods Corporation price-consensus-eps-surprise-chart | Hormel Foods Corporation Quote
Net sales of $2,972.6 million increased 2.5% from $2,898.8 million reported in the year-ago quarter. The metric surpassed the consensus mark of $2,944 million. Organic net sales increased 3.3% in the quarter, marking the company’s sixth consecutive quarter of organic top-line growth. Total volume declined 1.2%, while organic volume fell 0.8%.
Hormel Foods’ adjusted gross profit was $519.9 million, up from $487.2 million reported in the year-ago quarter. Adjusted selling, general and administrative expenses were $243.4 million for the quarter compared with $237.7 million in the year-ago period.
Adjusted operating income was $293.7 million, up from $264.9 million in the same quarter last year. Adjusted operating margin expanded to 9.9% from 9.1% reported in the year-ago quarter.
HRL Provides Revenue & Profit Insights by Segment
Net sales in the Retail unit increased 0.3% year over year to $1,789.7 million, while organic net sales rose 1.4%. Volume declined 2.1%, with organic volume down 1.6%, mainly due to the strategic exit from select non-core private-label snack nut items. The segment benefited from strong performance in Jennie-O ground turkey, along with contributions from Applegate natural and organic meats, Hormel Black Label bacon, the Herdez portfolio and Hormel Gatherings party trays.
Segment profit rose 13.5%, driven by higher organic net sales, improved performance across the turkey manufacturing network and lower SG&A expenses, partly offset by inflationary pressures in the logistics network.
Net sales in the Foodservice segment jumped 6.4% to $996.7 million, while organic net sales rose 6.6%. Volume increased 0.7%, with organic volume up 0.8%. The segment marked its 11th consecutive quarter of organic net sales growth, driven by broad-based strength across multiple product groups and categories, including customized solutions, branded pepperoni and premium prepared proteins.
Segment profit increased 10.8%, aided by market-based pricing actions, modest volume growth and improved turkey network performance.
Net sales in the International unit improved 4.3% year over year to $186.2 million, while organic net sales grew 4.6%. Volume and organic volume increased 1.3%, supported by strong branded exports led by SPAM luncheon meat and continued growth in the company’s China business.
Segment profit gained 20.3%, reflecting strong export performance and growth in China.
Hormel Foods’ Financial Health Snapshot
The company ended the quarter with cash and cash equivalents of $826.8 million, and long-term debt (excluding current maturities) of $2.4 billion.
In the fiscal second quarter, cash flow from operations totaled $178.9 million. Capital expenditures were $82.2 million, mainly related to investments in data and technology and infrastructure enhancements.
Hormel Foods returned $161 million to shareholders through dividends during the quarter.
Strategic Updates From HRL
During the quarter, Hormel Foods completed the previously announced sale of its whole-bird turkey business as part of its portfolio-shaping strategy. The divestiture supports the company’s focus on expanding its value-added protein portfolio and reducing exposure to more volatile commodity-driven businesses.
Management expects the transaction to reduce fiscal 2026 reported net sales by approximately $50 million, with minimal impact on adjusted diluted earnings per share.
What to Expect From HRL in the Future?
Hormel Foods reaffirmed fiscal 2026 net sales guidance in the range of $12.2-$12.5 billion and continues to expect organic net sales growth of 1-4%.
The company reaffirmed adjusted operating income guidance in the range of $1.06-$1.12 billion, implying growth of 4-10%. Adjusted diluted earnings per share are still expected in the range of $1.43-$1.51, calling for growth of 4-10%.
Management remains confident about delivering its full-year outlook, supported by continued momentum across all three segments, a favorable portfolio mix and ongoing operational improvements.
This Zacks Rank #4 (Sell) stock has tumbled 15.6% over the past three months compared with the industry’s decline of 8.5%.
Stocks to Consider
The Chef's Warehouse, Inc. (CHEF - Free Report) , a specialty food distributor serving restaurants, hotels and hospitality customers, 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 The Chef's Warehouse’s current financial-year sales and earnings indicates growth of 8.3% and 24.7%, respectively, from the prior-year reported levels. CHEF delivered a trailing four-quarter earnings surprise of 28.9%, on average.
Tyson Foods, Inc. (TSN - Free Report) operates as a leading protein company, producing chicken, beef, pork and prepared food products. TSN currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Tyson Foods’ current fiscal-year sales calls for growth of 4.5%, while the consensus mark for earnings indicates a 0.5% increase from the year-ago reported figures. TSN delivered a trailing four-quarter earnings surprise of 18.1%, on average.
Flowers Foods, Inc. (FLO - Free Report) is a leading U.S. bakery company that manufactures and markets packaged bakery foods, including bread, buns, snack cakes and tortillas, under brands such as Nature’s Own, Wonder and Dave’s Killer Bread. FLO carries a Zacks Rank #2.
The Zacks Consensus Estimate for Flowers Foods’ current and next fiscal-year EPS has seen upward revisions by 5.6% and 11.9%, respectively, over the past 60 days.