To be clear from the outset, I think that Hormel (HRL)
is a great company, but I do believe that a truly great stock idea
needs a confluence of great company and an attractive price and that
hasn't always been available with Hormel. A high price tag hasn't kept
other investors away, though, and the shares have done pretty well over
the past one and two-year periods (up about 14% and 65%) and have
steadily outperformed rivals like Hillshire Brands (HSH) and ConAgra (CAG) while lagging Tyson (TSN).
Hormel
remains pretty expensive at nearly 12x forward EBITDA, though the
company has done a very good job with Skippy so far and has the
financial resources to make other value-creating acquisitions. Close to
my fair value on a discounted cash flow basis, I think these shares are
definitely worth watching if the disappointment around earnings
persists.
Follow this link for more:
Premium-Priced Hormel Sells Off On A Less Than Perfect Quarter
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