Morningstar Rating

Stock Research and Analysis

by Erin Lash, CFA

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.
An uptick in soybean and corn commodity costs could dramatically increase Hormel's feed costs and pressure margins.
Meat processing has been a very cyclical industry in the past, so current elevated margins in the pork and turkey markets could incentivize excess capacity and depress margins for a lengthy period due to high exit costs. 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 poultry (primarily   Read more 

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