On Wednesday, Citi reaffirmed its Buy rating on shares of Hormel Foods (NYSE:HRL), maintaining a $35.00 price target. The company's fourth-quarter earnings per share (EPS) were reported in line with the Visible Alpha consensus. Hormel's operating profit fell slightly short of consensus estimates, attributed to corporate expense, while the aggregate profit of Hormel’s three reporting segments exceeded expectations.
The analyst noted that Hormel's guidance for fiscal year 2025 is in line with consensus estimates, with a 2% organic sales growth (OSG), $1.23 billion in operating profit, and $1.65 EPS. These figures are comparable to the consensus estimates of 2.2% OSG, $1.23 billion operating profit, and $1.66 EPS.
Notable strengths revealed by InvestingPro include a 32-year streak of dividend raises and a current yield of 3.65%. The Hormel shares indicated a downward movement at the time of writing, likely due to a marginal miss in fourth-quarter OSG, fiscal year 2025 OSG and EPS outlooks that are just below consensus at the midpoint, and the impact of Hormel's $250 million multi-year cost savings plan.
The cost savings plan is anticipated to contribute $75 million in fiscal year 2024 and between $100-150 million in fiscal year 2025. This suggests that the tailwind from the savings in fiscal year 2026 might be less significant than previously expected.
With a moderate debt level and strong liquidity position, Hormel maintains robust financial flexibility. Hormel's earnings call was scheduled for 9 AM ET on the same day, providing an opportunity for further insights into the company's performance and outlook. For deeper analysis and additional insights, access the comprehensive Pro Research Report available on InvestingPro.
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