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Can Hormel Foods Tackle Input Costs With Pricing and Efficiency?
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Key Takeaways
HRL began benefiting from lower pork commodity prices in the third quarter, with more gains expected ahead.
HRL faced elevated beef, freight, logistics and fuel costs, plus higher short-term turkey supply-chain costs.
HRL is using pricing, mix, efficiency gains and SG&A actions to improve profitability amid cost pressures.
Hormel Foods Corporation (HRL - Free Report) continues to navigate input cost pressures through pricing actions, supply chain improvements and favorable developments in select raw material markets. While commodity dynamics remain mixed, lower pork commodity prices began to benefit in the third quarter of fiscal 2026, though the timing of cost recognition delayed the full benefit, with a greater portion of the benefit expected in future quarters.
However, beef costs remained higher than last year, while freight, logistics and fuel expenses continued to weigh on performance. Grain and beef costs are expected to stay elevated in some areas, and the turkey business also faced short-term pressure from higher temperatures and weaker feed efficiency. Fuel costs eased for a time but later moved higher again, leaving the company’s overall logistics outlook largely unchanged.
Hormel Foods continues to build long-term capabilities across its supply chain, including through Hormel production systems that are driving more consistent and improved performance across its manufacturing network. The company is also enhancing its data and planning tools to improve collaboration and support better decision-making across the enterprise. Management remains positive about the progress being made in these areas while navigating short-term headwinds.
Additionally, Hormel Foods is using multiple levers to improve bottom-line performance, including pricing, mix, efficiency gains and SG&A actions. The company successfully executed two waves of pricing actions, while the team continues to focus on mix. The company has also generated further efficiency gains and taken significant SG&A actions. Looking ahead, Hormel Foods appears well positioned to partially offset persistent input cost pressures through a combination of pricing, mix improvement, efficiency gains and tighter cost discipline. Lower pork costs should provide additional support in coming quarters, while ongoing supply chain and SG&A initiatives could help cushion elevated beef, freight and other operating expenses. The effectiveness of these actions will remain important to watch as the company works to protect profitability in a still-challenging cost environment.
The Zacks Rundown for HRL
The company’s shares have lost 19% in the past three months compared with the industry’s 14.4% decline.
Image Source: Zacks Investment Research
From a valuation standpoint, HRL trades at a forward price-to-earnings ratio of 12.93, in line with the industry’s average. HRL currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HRL’s current and next fiscal year earnings implies a year-over-year increase of 8.8% and 3.6%, respectively.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
The Chef’s Warehouse, Inc. (CHEF - Free Report) distributes specialty food and center-of-the-plate products in the United States, the Middle East, and Canada. CHEF currently carries a Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CHEF’s current fiscal-year sales and earnings indicates growth of 10.8% and 33.7%, respectively, from the year-ago reported figures. CHEF delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Medifast, Inc. (MED - Free Report) operates as a health and wellness company that provides habit-based and coach-guided lifestyle solutions to address obesity and support a healthy life in the United States. MED currently carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for MED's current fiscal-year sales and earnings implies a decline of 27.3% and 26.8%, respectively, from the year-ago actuals. MED delivered a trailing four-quarter negative earnings surprise of 462.2%, on average.
Utz Brands, Inc. (UTZ - Free Report) , together with its subsidiaries, markets, sells and distributes fresh, frozen, and dry food and non-food products to foodservice customers in the United States. UTZ currently carries a Zacks Rank 2.
The Zacks Consensus Estimate for UTZ’s current fiscal-year sales implies growth of 3.7%, and the same for earnings implies a decline of 2.4% from the year-ago actuals. UTZ delivered a trailing four-quarter earnings surprise of 1.8%, on average.
View the Zacks #1 Rank List
Image: Bigstock
Can Hormel Foods Tackle Input Costs With Pricing and Efficiency?
Key Takeaways
Hormel Foods Corporation (HRL - Free Report) continues to navigate input cost pressures through pricing actions, supply chain improvements and favorable developments in select raw material markets. While commodity dynamics remain mixed, lower pork commodity prices began to benefit in the third quarter of fiscal 2026, though the timing of cost recognition delayed the full benefit, with a greater portion of the benefit expected in future quarters.
However, beef costs remained higher than last year, while freight, logistics and fuel expenses continued to weigh on performance. Grain and beef costs are expected to stay elevated in some areas, and the turkey business also faced short-term pressure from higher temperatures and weaker feed efficiency. Fuel costs eased for a time but later moved higher again, leaving the company’s overall logistics outlook largely unchanged.
Hormel Foods continues to build long-term capabilities across its supply chain, including through Hormel production systems that are driving more consistent and improved performance across its manufacturing network. The company is also enhancing its data and planning tools to improve collaboration and support better decision-making across the enterprise. Management remains positive about the progress being made in these areas while navigating short-term headwinds.
Additionally, Hormel Foods is using multiple levers to improve bottom-line performance, including pricing, mix, efficiency gains and SG&A actions. The company successfully executed two waves of pricing actions, while the team continues to focus on mix. The company has also generated further efficiency gains and taken significant SG&A actions.
Looking ahead, Hormel Foods appears well positioned to partially offset persistent input cost pressures through a combination of pricing, mix improvement, efficiency gains and tighter cost discipline. Lower pork costs should provide additional support in coming quarters, while ongoing supply chain and SG&A initiatives could help cushion elevated beef, freight and other operating expenses. The effectiveness of these actions will remain important to watch as the company works to protect profitability in a still-challenging cost environment.
The Zacks Rundown for HRL
The company’s shares have lost 19% in the past three months compared with the industry’s 14.4% decline.
Image Source: Zacks Investment Research
From a valuation standpoint, HRL trades at a forward price-to-earnings ratio of 12.93, in line with the industry’s average. HRL currently carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HRL’s current and next fiscal year earnings implies a year-over-year increase of 8.8% and 3.6%, respectively.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
The Chef’s Warehouse, Inc. (CHEF - Free Report) distributes specialty food and center-of-the-plate products in the United States, the Middle East, and Canada. CHEF currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for CHEF’s current fiscal-year sales and earnings indicates growth of 10.8% and 33.7%, respectively, from the year-ago reported figures. CHEF delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Medifast, Inc. (MED - Free Report) operates as a health and wellness company that provides habit-based and coach-guided lifestyle solutions to address obesity and support a healthy life in the United States. MED currently carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for MED's current fiscal-year sales and earnings implies a decline of 27.3% and 26.8%, respectively, from the year-ago actuals. MED delivered a trailing four-quarter negative earnings surprise of 462.2%, on average.
Utz Brands, Inc. (UTZ - Free Report) , together with its subsidiaries, markets, sells and distributes fresh, frozen, and dry food and non-food products to foodservice customers in the United States. UTZ currently carries a Zacks Rank 2.
The Zacks Consensus Estimate for UTZ’s current fiscal-year sales implies growth of 3.7%, and the same for earnings implies a decline of 2.4% from the year-ago actuals. UTZ delivered a trailing four-quarter earnings surprise of 1.8%, on average.