Goldman Sachs initiates Hormel Foods stock with buy rating

Investing.com - Goldman Sachs initiated coverage on Hormel Foods (NYSE:HRL) with a buy rating and a price target of $35 on Monday. According to InvestingPro data, the stock currently trades at a P/E ratio of 22.3x and offers a dividend yield of 3.81%.

The investment bank cited Hormel’s strong packaged food portfolio with diverse brands, price points, and occasions across key protein categories as factors supporting the positive outlook. The company has maintained dividend payments for 55 consecutive years and operates with a moderate level of debt.

Goldman Sachs forecasts an improving earnings outlook for the food company, driven by the recovery of its Planters business, stabilization in the turkey supply backdrop, and ongoing cost savings efforts.

The firm believes FactSet consensus underestimates Hormel’s ability to reaccelerate growth into fiscal year 2026, presenting an opportunity for investors.

Goldman Sachs also noted that Hormel’s valuation appears attractive at 12.3 times next twelve months enterprise value to EBITDA, which falls below its one-year, three-year, and five-year averages of 13.0, 14.6, and 15.8 times, respectively.

In other recent news, Hormel Foods reported its second-quarter earnings for 2025, aligning with expectations for earnings per share (EPS) but slightly missing revenue forecasts. The company’s EPS was $0.35, meeting analyst predictions, while revenue reached $2.9 billion, just below the anticipated $2.92 billion. Despite this revenue shortfall, Hormel Foods demonstrated resilience with a 1% organic increase in net sales, supported by strong performances in premium segments such as Applegate and Mexican foods. In discussions with Piper Sandler, Hormel’s leadership indicated that the company’s transformation and modernization program could potentially drive results above current consensus estimates. Piper Sandler maintained a Neutral rating on Hormel Foods, noting the company’s competitive advantages in the foodservice segment. Additionally, Hormel has implemented a 30% capacity reduction in its turkey operations to address commodity exposure, while the Planters brand has returned to full distribution following earlier disruptions. Hormel Foods anticipates strong growth in the second half of the year, with a full-year net sales growth forecast of 2-3% and adjusted EPS projected between $1.58 and $1.68.

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