Yahoo Finance Strategic Priorities Aid Hormel Foods (HRL), High Costs Ail
Focus on strategic priorities, including transformation and modernization have been working well for Hormel Foods Corporation HRL. The leading food company is undertaking buyouts to augment portfolio strength and boost revenues. However, the company continues to battle inflationary headwinds.
Let’s discuss this in detail.
Focus on Strategic Priorities
The Zacks Rank #3 (Hold) 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. In addition, Hormel Foods’ One Supply Chain initiative is aimed at reducing costs and complexity while investing in long-term growth.
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Prudent Buyouts
Hormel Foods intends to strengthen its business on the back of strategic acquisitions. 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.
High Costs Stay
Hormel Foods has been battling the adverse impact of rising selling, general and administrative (SG&A) expenses. In the first quarter of fiscal 2024, SG&A expenses increased 8%, thanks to additional investments in transformation and modernization efforts coupled with increased employee-related costs. Management expects to witness a major increase in advertising investments in the fiscal second quarter and the fiscal 2024 as it continues to support various brands.
The company’s focus on the upsides mentioned above is likely to offer respite. HRL’s stock has increased 7.4% year to date compared with the industry’s 8.8% 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 20.2% and 35.6%, respectively, from the year-ago reported numbers.
Utz Brands Inc. UTZ manufactures a diverse portfolio of salty snacks, currently carrying 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
