Investors with a great appetite for a pocketful of returns should consider Hormel Foods Corporation (HRL, Financial), a multinational manufacturer and marketer of consumer-branded food and meat products.
Hormel is primarily engaged in the production of a variety of meat and food products, many of which are among the best known and trusted in the food industry, and the marketing of those products throughout the U.S. and internationally.
The company enjoys a strong reputation among consumers, retail grocers, foodservice and industrial customers for products highly regarded for quality, taste, nutrition, convenience and value.
The company achieved record fourth-quarter results, logging record earnings for the 10th straight quarter. The company achieved record bottom-line results for the full year; with fiscal 2015 adjusted net earnings up 19% over last year and all five segments registering earnings growth, Hormel has gained a strong brand reputation among its consumers that will boost its position. The company’s strength can be seen in multiple areas. This leading manufacturer and marketer will continue the trend and won’t let its valued investors down in the long run.
Strong fourth quarter
Record non-GAAP adjusted diluted EPS was 74 cents during the quarter, an increase of 17% from 63 cents per share in the prior year quarter.
GAAP diluted EPS was 69 cents.
Dollar sales were $2.4 billion, a decrease of 6%; volume was down 2%.
Grocery Products operating profit increased 57%. Volume was up 5%; dollar sales were up 4%.
Excluding incremental net sales of MegaMex Foods products, volume was down 2%, and dollar sales were down 2%.
Refrigerated Foods operating profit increased by 27%. Volume was up 2% (volume flat excluding sales of APPLEGATE natural and organic meats). Dollar sales were down 5% (dollar sales down 12% excluding sales of APPLEGATE natural and organic meats).
Jennie-O Turkey Store operating profit decreased by 23%. Volume was down 21%; dollar sales were down 18%. Decreases reflect the substantial impact of the avian influenza outbreak, as flocks lost earlier in the year created large volume shortfalls in operations and sales.
Specialty Foods operating profit increased by 63%. Volume was up 1%; dollar sales were down 3%.
International & Other operating profit increased by 3%. Volume was up 5%; dollar sales were flat.
Adjusted net earnings were a record $714.4 million, an increase of 19% from net earnings of $602.7 million during the prior year period. Non-GAAP adjusted diluted earnings per share were $2.64, which marked an increase of 18% from diluted net earnings per share of $2.23 during the prior year period.
On a GAAP basis, the company reported fiscal 2015 net earnings of $686.1 million. GAAP diluted earnings per share were $2.54. Sales for the year ended Oct. 25, 2015, totaled $9.3 billion, a decrease of 1% from the prior year period.
Dividends
Effective Nov. 16, 2015, the company paid its 349th consecutive quarterly dividend at the annual rate of $1.00.
Outlook
The company expects the following:
- Strong demand for APPLEGATE natural and organic products will be an additional growth catalyst for the Refrigerated Foods segment.
- Specialty Foods should deliver increases through the growth of its MUSCLE MILK protein nutrition products, and the company expects International to achieve year-over-year improved results through the expansion of business in China along with increased sales of SPAM and SKIPPY family of products.
- Earnings to be in the range of $2.85 to $2.95 per share.
Strong attributes of the company
- Consistent positive results.
- Strong legacy portfolio.
- Core innovation.
- Multicultural flavors.
- Raw material diversification.
- Innovation.
Recognition
On Jan. 8, Hormel was named to the 2016 Best Companies for Leaders list by Chief Executive magazine for the third consecutive year, coming in at No. 20.
On Nov. 18, 2015, Hormel announced that it received a perfect score of 100% on the 2016 Corporate Equality Index (CEI), a national benchmarking survey and report on corporate policies and practices related to LGBT workplace equality, administered by the Human Rights Campaign (HRC) Foundation. Hormel joins the ranks of 407 major U.S. businesses.
It has also been recognized on the annual Corporate Responsibility (CR) Magazine 100 Best Corporate Citizens List for the seventh consecutive year, coming in at No. 44.
The company is a member of the Standard & Poor’s 500 Index and S&P 500 Dividend Aristocrats for 2014 and was named the 2013 Sustainable Supply Chain of the Year by Refrigerated & Frozen Foods magazine. Hormel Foods was also recognized as a 2015 Military Friendly Employer by G.I. Jobs magazine and on the 2015 Best for Vets Employers List by Military Times.
(Source: Company Website)
On a concluding note
The company is poised to enjoy renewed revenue growth as the year proceeds.
Hormel is a multinational manufacturer and marketer of consumer-branded food and meat products, many of which are among the best known and trusted in the food industry. The company leverages its extensive expertise, innovation and high competencies in pork and turkey processing and marketing to bring branded, value-added products to the global marketplace.
Disclosure: I do not hold any position in the company.
