Hormel Stock Near Lows, But Tariff Relief Could Boost Outlook

Entrepreneur

30-05-2025

Hormel stock is trading near 10-year lows, but an attractive valuation and recent analysts' upgrades suggest the stock may offer value if tariffs are suspended
This story originally appeared on MarketBeat
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Despite its status as a dividend king, many investors weren't expecting much from Hormel Foods Corp. (NYSE: HRL) in its second-quarter earnings report for the 2025 fiscal year. The company didn't disappoint, but mixed results sent the stock down 2.8% immediately following the report.
Revenue of $2.90 billion was a slight miss from the $2.92 billion expected. However, adjusted earnings per share (EPS) of 35 cents were in line with expectations. More importantly, revenue was up slightly year-over-year (YOY). The company delivered $2.89 billion in the second quarter of its 2024 fiscal year.
However, earnings per share (EPS) were down about 10% YOY.
That speaks directly to tariff pressures that are impacting many consumer staples stocks. Add to that a recall on its beef stew and the announcement of a transition at the executive level, and there are a lot of reasons to stay away from the stock. But analysts have been viewing things differently.
That, combined with an attractive valuation, may make HRL stock worth a closer look.
Tariff Concerns Weigh on Earnings
Many companies are getting more precise in defining how tariffs impact their companies. For Hormel, that means using the phrase 'supply chain issues.' The company isn't wrong. The Trump administration tariffs include increased tariffs on processed meats, certain vegetables and packaging materials being imported from China, Canada, and Mexico.
The tariffs impact Hormel products such as Spam and other pre-packaged meals that rely on these imported ingredients. Those effects were reflected in the sector profits across the company's verticals. Hormel's retail sector posted a higher sector profit, but it was offset by declines in sector profit in its Foodservice and International verticals.
However, the company suggests that the worst may be behind it.
That's because it effectively maintained its full-year guidance. The current projections are for net sales between $12 and $12.2 billion, with adjusted earnings per share coming in between $1.58 and $1.68. The high end has narrowed from $1.72 in the prior quarter.
It's also important to keep in mind that the earnings report was already put together before the court ruling to strike down the Trump administration's tariff plans. The final result is likely to take months to work out, but the return to 2024 levels may benefit Hormel in the current quarter.
A Change in the Marketing Ranks
About a week before the earnings report, Hormel announced two significant changes in its executive ranks. Scott Aakre, the current group vice president and chief marketing officer (CMO), announced his retirement at the end of the current fiscal year. Aakre will continue to serve on the company's board of directors.
Hormel also announced that Jeff Baker, the current group vice president of retail marketing for value-added meats, will become the company's new group vice president for retail marketing starting in fiscal 2026. Baker will assume some of the responsibilities currently under Aakre.
Analysts Issued Upgrades Ahead of Earnings
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Despite the tariff overhang, analysts have been bullish on HRL stock heading into earnings. Since April 15, the Hormel analyst forecasts on MarketBeat show three analysts have upgraded the stock. Those upgrades included BNP Paribas, which took the stock from a Strong Sell to a Hold.
This is likely a case of a stock being different from a company. Analysts aren't ignoring the uncertainty that Hormel faces from tariffs and a consumer that's under pressure.
The stock is down 4.4% in 2025 and over 12% in the last 12 months. However, it must be noted that HRL stock is now trading near 10-year lows. That's likely what analysts are looking at with a stock that's trading at a forward price-to-earnings (P/E) ratio of around 18x. That's a slight discount to itself and the consumer staples sector.
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