Yahoo Finance Hormel Foods (HRL) Looks Appetizing on Foodservice Demand
Hormel Foods Corporation HRL is reaping benefits from the growing demand for Foodservice products. The leading food company has been strengthening its business on the back of strategic acquisitions. The company’s focus on its six strategic priorities is noteworthy. These factors boosted first-quarter fiscal 2024 results, with the top and the bottom line increasing year over year and surpassing the Zacks Consensus Estimate.
Management expects fiscal 2024 sales growth of 1-3%, backed by volume increases in core categories, greater brand support and innovation and gains from additional pricing actions, among others.
Let’s delve deeper.
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Strong Foodservice Business
Hormel Foods has been reaping benefits from the growing demand for Foodservice products. The company’s long-standing relationships, differentiated product portfolio, innovative solutions and impressive sales team are fueling growth in the Foodservice business. These trends continued in the first quarter of fiscal 2024, with net sales in the Foodservice segment increasing 9.4% to $913.1 million and volumes rising 8%. The upside was backed by broad-based growth in several categories, led by Jennie-O turkey and double-digit growth for products like Hormel Bacon 1 cooked bacon, pepperoni and Austin Blues smoked meats, among others.
Management continues to witness broad volume growth in the fiscal 2024, led by turkey, bacon and pepperoni. This, along with increased raw material input markets, is likely to support net sales growth in the segment.
Acquisitions Drive Growth
Hormel Foods is on track with prudent buyouts to drive growth. In the fourth quarter of fiscal 2022, Hormel Foods announced its acquisition of a minority stake in Indonesia-based food and beverage company PT Garudafood Putra Putri Jaya Tbk. The move helps Hormel Foods expand its presence in Indonesia and Southeast Asia. On Jun 7, 2021, the company acquired the Planters snacking portfolio. In the first quarter of fiscal 2024, Planters' volume and dollar share maintained favorable momentum with total points of distribution and household penetration growth. Also, management acquired a Texas-based pit-smoked meats company, Sadler's Smokehouse (March 2020), which is strengthening its position in the foodservice space.
Focus on Strategic Priorities
The Zacks Rank #2 (Buy) company is progressing with its six strategic priorities, which include enhancing focus and fueling growth in the Retail unit, reinforcing leadership in Foodservice, pursuing solid global expansion, implementing the enterprise entertaining & snacking vision, emphasizing the One Supply Chain initiative and continuing the ongoing transformation and modernization of the business.
With regard to transformation and modernization initiatives, it is focused on supply chain efficiency, portfolio optimization and data and analytics. In the plan work stream, management is implementing a new end-to-end planning process and is integrating new planning technology. Under the buy work stream, the company is realizing the benefits of new procurement and productivity programs. Its focus on such initiatives is vital to projected growth in the coming three years. Hormel Foods’ One Supply Chain initiative is aimed at reducing costs and complexity while investing in long-term growth.
Focus on such well-chalked strategic priorities coupled with the upsides mentioned above are likely to keep narrating HRL’s growth story.
Hormel Foods’ shares have increased 9.9% in the past three months compared with the industry’s 11.5% growth.
Better-Ranked Staple Stocks
The Chef’s Warehouse CHEF, which engages in the distribution of specialty food products, currently carries a Zacks Rank #2 (Buy). CHEF has a trailing four-quarter earnings surprise of 3.2%, on average. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal-year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.
Vital Farms Inc. VITL offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter average earnings surprise of 155.4%.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 18.6% and 35.6%, respectively, from the year-ago reported numbers.
Utz Brands Inc. UTZ, which manufactures a diverse portfolio of salty snacks, currently carries a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 2.6%, on average.
The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 19.3% from the year-ago reported numbers.
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Hormel Foods Corporation (HRL) : Free Stock Analysis Report
The Chefs' Warehouse, Inc. (CHEF) : Free Stock Analysis Report
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Utz Brands, Inc. (UTZ) : Free Stock Analysis Report
