Thursday, May 22, 2014

Seeking Alpha: Premium-Priced Hormel Sells Off On A Less Than Perfect Quarter

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.

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Premium-Priced Hormel Sells Off On A Less Than Perfect Quarter

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