Why Hormel Foods (HRL) Stock Is Falling Today

What Happened:

Shares of packaged foods company Hormel (NYSE:HRL) fell 10.3% in the pre-market session after the company reported second-quarter earnings results. Its revenue unfortunately missed analysts' expectations, and its full-year revenue guidance missed Wall Street's estimates. The lowered guidance is expected to reflect a number of factors, including "lower-than-expected commodity markets, production disruptions at its Suffolk, Virginia, facility, and declines in its contract manufacturing business." Overall, this was a mediocre quarter.

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What is the market telling us:

Hormel Foods’s shares are not very volatile than the market average and over the last year have had only 4 moves greater than 5%. Moves this big are very rare for Hormel Foods and that is indicating to us that this news had a significant impact on the market’s perception of the business. 

The biggest move we wrote about over the last year was 6 months ago, when the stock gained 13.7% on the news that the company reported first-quarter results that exceeded analysts' revenue and EPS expectations. The topline growth benefitted from strong volume growth (up 4% year on year). Hormel highlighted the strong demand for its food service products as well as the Planters® snack nuts business. While raising guidance after beating a quarter is always icing on the cake, Hormel's maintenance of guidance shows that it's staying on track. Overall, this was a really good quarter that should please shareholders.

Hormel Foods is down 6.7% since the beginning of the year, and at $30.60 per share it is trading 22.2% below its 52-week high of $39.33 from September 2023. Investors who bought $1,000 worth of Hormel Foods’s shares 5 years ago would now be looking at an investment worth $719.49.

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