Financial Review: Hormel Foods (HRL) vs. Smithfield Foods (SFD)
Hormel Foods (NYSE: HRL) and Smithfield Foods (NYSE:SFD) are both non-cyclical consumer goods & services companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, dividends, analyst recommendations and valuation.
Institutional and Insider Ownership
38.3% of Hormel Foods shares are held by institutional investors. 3.5% of Hormel Foods shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This table compares Hormel Foods and Smithfield Foods’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of current recommendations and price targets for Hormel Foods and Smithfield Foods, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Hormel Foods currently has a consensus target price of $35.11, suggesting a potential downside of 5.72%.
Valuation and Earnings
This table compares Hormel Foods and Smithfield Foods’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Hormel Foods||$9.17 billion||2.14||$846.73 million||$1.57||23.72|
Hormel Foods has higher revenue and earnings than Smithfield Foods. Smithfield Foods is trading at a lower price-to-earnings ratio than Hormel Foods, indicating that it is currently the more affordable of the two stocks.
Hormel Foods pays an annual dividend of $0.68 per share and has a dividend yield of 1.8%. Smithfield Foods does not pay a dividend. Hormel Foods pays out 43.3% of its earnings in the form of a dividend. Smithfield Foods has increased its dividend for 50 consecutive years.
Hormel Foods beats Smithfield Foods on 9 of the 11 factors compared between the two stocks.
About Hormel Foods
Hormel Foods Corporation is engaged in the production of a range of meat and food products. The Company operates through four segments: Grocery Products, which is engaged in the processing, marketing and sale of shelf-stable food products sold for the retail market and health and also consists of nutrition products, including Muscle Milk protein products.; Refrigerated Foods, which consists of the processing, marketing and sale of branded and unbranded pork, beef, chicken and turkey products for retail, foodservice and fresh product customers; Jennie-O Turkey Store (JOTS), which consists of the processing, marketing and sale of branded and unbranded turkey products for retail, foodservice and fresh product customers; and International & Other, which includes Hormel Foods International Corporation, which manufactures, markets and sells the Company products internationally.
About Smithfield Foods
Smithfield Foods, Inc. produces and markets a variety of fresh meat and packaged meats products both domestically and internationally. The Company operates in four segments: Pork, Hog Production, International and Corporate, each of which consists of a number of subsidiaries, joint ventures and other investments. The Pork segment consists mainly of its three wholly owned United States fresh pork and packaged meats subsidiaries: The Smithfield Packing Company, Inc. (Smithfield Packing), Farmland Foods, Inc. (Farmland Foods) and John Morrell Food Group (John Morrell). The Hog Production segment consists of the Company’s hog production operations located in the United States. On September 2012 (fiscal 2013), the Company acquired a 70% controlling interest in American Skin Food Group, LLC. Effective September 26, 2013, Shuanghui International Holdings Ltd merged with Smithfield Foods Inc, a producer and wholesaler of pork meat products.
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