Morningstar Rating

Stock Research and Analysis

by Liang Feng

Bulls Say

Superior brand recognition and convenient value-added products allow Hormel to introduce new products and charge higher prices for its products than its meat processing peers.
Several of Hormel’s products (Skippy and Spam, for instance) carry international brand recognition, and could benefit from rapidly growing demand for value-added proteins in regions like Asia.
Hormel should benefit from strong growth in undeveloped distribution channels, such as convenience stores, by pushing protein supplements (Muscle Milk, for instance) and convenient on-the-go meals (such as Rev). Read more 

Bears Say

Spending on product innovation and marketing support will be increasingly necessary as a result of heightened competition from branded and private-label offerings, which are fighting for increasing share of consumer’s limited discretionary dollars.
Surging price inflation for soybean and corn commodities could dramatically increase Hormel's feed costs and pressure margins.
The negotiating leverage of retailers could increase at the expense of packaged meat companies and could make raising prices even more difficult for Hormel in the future. Read more 

Management

Jeffrey Ettinger has spent more than 20 years with Hormel, assuming the positions of chairman, president, and CEO in 2006. We think his experience working in the Jennie-O Turkey Store segment should serve the firm and its shareholders well, although   Read more 

Profile

Hormel manufactures and distributes value-added meat products consisting primarily of pork and turkey. A large portion of the firm's revenue comes from fresh meats (51%   Read more 

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