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Image source: The Motley Fool. Thursday, Aug. 27, 2026 at 9:00 a.m. ET Director of Investor Relations - Jess Blomberg Interim Chief Executive Officer - Jeffrey Ettinger President and Chief Executive Officer-elect - John Ghingo Interim Chief Financial Officer and Controller - Paul Kuehneman Operator: Hello, everyone. Thank you for joining us, and welcome to the Hormel Foods Corporation Third Quarter Earnings Call. [Operator Instructions] I will now hand the conference over to Jess Blomberg, Director of Investor Relations. Please go ahead. Jess Blomberg: Good morning. Welcome to the Hormel Foods Conference Call for the Third Quarter of fiscal 2026. We released results this morning before the market opened. If you did not receive a copy of the release, you can find it on our website, hormelfoods.com under the Investors section, along with supplemental slide materials. On our call today is Jeff Ettinger, Interim Chief Executive Officer; John Ghingo, President and Chief Executive Officer-elect; and Paul Kuehneman, Interim Chief Financial Officer and Controller. Jeff, John and Paul will review the company's fiscal 2026 third quarter results and provide a perspective on the remainder of the year. We will conclude with the Q&A portion of the call. The line will be open for questions following the prepared remarks. As a courtesy to the other participants, please limit yourself to one question with one follow-up. At the conclusion of this morning's call, a webcast replay will be posted to the Investors section of our website and archived for 1 year. Before we get started this morning, I'd like to reference our safe harbor statement. Some of the comments we make today will be forward-looking, and actual results may differ materially from those expressed in or implied by the statements we will be making. Please refer to our most recent annual report on Form 10-K and quarterly reports on Form 10-Q, which can be accessed on our website under the Investors section. Additionally, please note we will be discussing certain non-GAAP financial measures this morning. Management believes that doing so provides investors with a better understanding of the company's underlying operating performance. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Further information about our non-GAAP financial measures, including comparability items and reconciliations, are detailed in our press release, which can be accessed on our website. I will now turn the call over to Jeff Ettinger. Jeffrey Ettinger: Thank you, Jess, and good morning, everyone. Earlier this year, I outlined priorities for Hormel Foods that could be summarized into 3 areas: strengthen execution, realize the benefits of the actions we had taken to improve profitability and foster greater collaboration across the enterprise. As we review the third quarter results today, I am pleased by the progress we have made against each of these priorities. I would characterize Q3 as a solid quarter, though admittedly not as strong as Q2. Our team remains focused on delivering profitable growth, and that focus contributed to another quarter of earnings growth as adjusted earnings per share increased 6% versus last year. On the top line, results were more mixed. Organic net sales declined with much of the pressure coming from deliberate portfolio shaping actions, reduced commodity markets and a still pressured consumer environment. At the same time, we continue to see positive momentum across many of the more strategic parts of our portfolio. Importantly, these results build upon strong year-to-date performance. Through the first 9 months of the fiscal year, we have increased organic net sales, delivered strong adjusted earnings growth and strengthened the underlying fundamentals of the business. Our year-to-date results, combined with our expectations for the fourth quarter, give us the confidence to raise and narrow our fiscal 2026 adjusted earnings outlook to a new range of $1.45 to $1.51, compared to our prior range of $1.43 to $1.51. We remain confident in delivering fiscal 2026 adjusted earnings growth consistent with or above our long-term algorithm. We have also tightened our full year organic net sales growth expectation to 1% to 2% from our prior range of 1% to 4%, better reflecting current market and consumer conditions. Before I conclude my remarks, I want to take a moment to recognize and congratulate John Ghingo on his appointment as the next Chief Executive Officer of Hormel Foods. Over the last year, John and I have developed a strong partnership. We have had the opportunity to work side-by-side on virtually every significant matter facing the company. Together, alongside our leadership team, we have shaped our operational priorities, investment decisions, portfolio strategy and long-term growth plans. Building upon his background of more than 25 years of leadership across the consumer packaged goods industry, including 6 years in 3 important roles at Hormel Foods, John is more than ready for his new role. I have a deep appreciation for his commitment to our people, customers, shareholders and the communities where we operate. I am very confident that Hormel Foods is well positioned for its exciting next chapter under John's leadership. I would also like to take a moment to thank our investors and the broader investment community for your engagement, feedback and support over the last year. While this is my last earnings call, I am looking forward to spending time on the road meeting with many of you over the next couple of months. It has been both a privilege and a rewarding experience to serve the company this past year. With that, I will turn the call over to John to discuss the quarter in more detail and share his perspective on the opportunities ahead. John Ghingo: Thank you. Before I discuss the quarter, I want to thank Jeff for his leadership and partnership over the past year. I've benefited tremendously from his counsel, experience and commitment to Hormel Foods as we work together to navigate a period of change while positioning the company for the future. Jeff's impact on Hormel extends far beyond the past year, and we're fortunate that we'll continue to benefit from his perspective and leadership as a member of our Board of Directors. While this is Jeff's final earnings call as Interim CEO, I look forward to continuing our engagement with investors, customers and employees as we finish out the fiscal year. I am honored to lead Hormel Foods as its next Chief Executive Officer. This is a company with a rich history of protein innovation, a distinctive culture and an incredibly talented team. I've spent considerable time evaluating our business through a clear lens, where we are winning, where we need to improve and which capabilities matter most to creating long-term value. What gives me confidence is that the fundamental strengths of Hormel Foods remain firmly in place. We have a portfolio of beloved brands, strong positions in attractive categories, a differentiated foodservice business, a strategic international footprint and a balance sheet that provides flexibility. At the same time, we have identified opportunities to improve execution, simplify portions of our business and sharpen our allocation of resources toward higher potential growth opportunities. The work we're doing today is designed to build a stronger Hormel Foods over the long term. With that context, let me begin with our third quarter results. While there were several moving pieces during the quarter, we remained focused on disciplined execution and delivered adjusted earnings growth. Net sales declined modestly, reflecting portfolio shaping actions, softer commodity markets and a challenged consumer environment, while adjusted operating margins improved versus the prior year. Let's walk through the key drivers of results for each of our segments, starting with foodservice. In Q3, we delivered our 12th consecutive quarter of organic net sales growth, continuing to outperform in an industry facing softer traffic trends and ongoing macro pressure. Our growth remained broad-based across channels, customers and product platforms, reflecting the durability of our portfolio and the strength of our category positions. Premium prepared proteins and branded pepperoni were particularly strong contributors during the quarter, reflecting our ability to align with operator demand for differentiated value-added solutions. Importantly, our top line results were achieved despite the impact of lower commodity-based pricing in portions of the business. Foodservice profit growth once again outpaced sales performance, driving another quarter of margin expansion. This reflects our disciplined focus on mix management and profitability. Foodservice segment continues to benefit from the power of our operator-focused model and our direct sales organization, both of which allow us to identify emerging trends, solve real customer challenges and capture opportunities. Foodservice remains a key driver for the company and an important contributor to both top line momentum and earnings performance. In retail, as I mentioned last quarter, we expected a noisier top line in the back half of the year. The divestiture of our whole-bird turkey business and the exit from certain private label snack-nut products weighed on year-over-year net sales comparisons. These actions, along with pricing elasticities and a challenging consumer environment also affected volume during the quarter. While many of these factors were anticipated, the impact on volume was somewhat greater than we originally expected. These dynamics affected our short-term performance, but they reinforce the importance of the long-term actions we are taking to improve the quality of our business and focus our resources on higher growth, higher-margin opportunities. Importantly, the work we are doing to strengthen our protein-centric offerings is translating into marketplace momentum for our priority brands with several delivering net sales growth in the quarter and continuing to gain traction with consumers. Sales of Jennie-O ground turkey and the Applegate portfolio grew this quarter, benefiting from sustained demand for protein-rich offerings. Hormel chili and our Refrigerated Entrees also delivered dollar sales growth, reflecting consumers' desire for convenient, versatile and flavor-forward meal solutions. Planters also delivered a strong quarter, fueled by impactful in-store activations and continued investment behind the brand. Offerings such as the limited time flavor displays for America 250 enhanced visibility, drove consumer engagement and reinforced Planters' leadership in the category. At the same time, we continue to advance our focus on e-commerce and digital media. While still early, the results are encouraging and reinforce our confidence in this iconic brand. Across retail, we continue to shift a greater share of our marketing investment towards retailer media and digital channels, enabling more targeted, relevant and measurable consumer engagement. This evolution will continue through the fourth quarter as we further strengthen our capabilities. Over time, we expect these efforts will improve the effectiveness and efficiency of our marketing investments, allowing us to allocate more resources toward higher return brand-building activities. Shifting now to International. While the quarter was impacted by some unique items that Paul will cover in more detail, our long-term opportunity remains highly compelling. We continue to focus our efforts on the markets and opportunities with the strongest long-term growth potential. During the quarter, we took important steps to advance that strategy. First, we made the decision to divest our Brazil operations as this proved to be a subscale business in a challenging market. This divestiture allows us to further sharpen our portfolio focus to the Asia Pacific region. Given the significant opportunities in this region, we also relocated our Group Vice President of International, Swen Neufeldt, to Singapore. Positioning Swen in the region allows them to be more closely connected to our teams, customers and partners, enabling faster decision-making, deeper market engagement and stronger execution as we pursue our growth ambitions across the region. Turning now to our enterprise supply chain. We remain focused on strengthening execution and improving how we serve our customers. During the quarter, we experienced incremental costs related to our planned inventory rebalancing actions, lower production volumes and certain operating challenges. In addition, the broader logistics environment remained pressured. These short-term impacts should not overshadow the progress we are making to develop our supply chain capabilities for the long term. We continue to advance Hormel production systems in our facilities, enhance visibility through better data and planning tools and improved coordination across our network. More broadly, I'm encouraged by the progress we're seeing across the business. Through the first 9 months of the year, organic net sales increased 1%, we grew adjusted operating margins 30 basis points and adjusted earnings per share increased 6%, providing tangible evidence that our priorities are clear and our strategy is working. No single quarter has been easy, but we have remained committed to delivering our objectives and positioning the business for the future. We're sharpening our portfolio, investing behind our strongest brands and growth platforms, simplifying how we operate and strengthening the capabilities that will help drive sustainable long-term growth. As we plan for the next fiscal year, we remain optimistic. We are focused on delivering balanced growth, expanding profitability and generating strong cash flow. We operate an attractive category centered around protein, and we believe we have what it takes to win in our space. As the changes we've made over the past year become embedded in the business, we believe Hormel Foods is increasingly well positioned to deliver growth and profitability consistent with our long-term objectives. Before I turn the call over to Paul, I want to briefly acknowledge the leadership announcement we shared this week. We are excited to welcome Ash Bhumbla to Hormel Foods as our next Chief Financial Officer. Ash brings extensive finance, operations and transformation experience, and I am confident he will be a strong addition to our leadership team as we continue to strengthen and modernize the business. I also want to thank Paul for his outstanding leadership over the past year as Interim Chief Financial Officer. Paul has been a trusted partner to Jeff, myself and our broader team during an important period for the company. His financial expertise, deep understanding of Hormel Foods and commitment to our people have made a meaningful impact across the organization. We are grateful for his many contributions and look forward to his continued leadership within our finance organization. With that, I'll turn the call over to Paul. Paul Kuehneman: Thank you, John, and good morning, everyone. Before discussing our overall results, I'd like to provide some additional context on our International segment as several items affected our results during the quarter. First, we announced a definitive agreement to sell our operations in Brazil. As a result, we recognized a loss during the quarter, which was recorded at the corporate level. The transaction closed early in the fourth quarter. As such, Brazil's operating results will be excluded from our organic volume and net sales comparisons going forward. Second, we recorded an impairment related to a minority investment in Indonesia, which was reflected in equity and earnings. Third, the underlying demand for our branded export products remained resilient, but the recognition of certain SPAM export sales was adversely impacted due to a onetime legal entity transition. Strategically, we believe that the creation of this structure puts us in a more advantageous position to serve our global consumers. While these items affected our third quarter reported results, they do not change our view of the underlying fundamentals or long-term growth potential for our International segment. With that context, let me turn to our overall quarterly performance. Third quarter organic net sales declined 2% compared to the prior year. As Jeff and John discussed, portfolio shaping actions, softer commodity markets and the consumer environment were the primary drivers of the decline. Gross profit was $472 million in the quarter and gross margin was 15.9%. Lower volumes and some operational inefficiencies negatively impacted margin improvement for the quarter, but we believe that we remain on track for improving margins over time. I'll unpack a few of the drivers behind that belief. First, on cost of goods sold, over the long term, lower commodity prices help our margin profile. On a short-term basis, however, the benefits of lower input costs can take some time to be realized as we work through our inventory position. In the third quarter, we started to recognize the benefit of lower pork prices in our P&L. But given the timing of the cost recognition, we expect a greater portion of the benefits to be realized in future quarters. For beef inputs, prices remained elevated during the quarter relative to the prior year. Elsewhere in cost of goods, several of the factors we highlighted last quarter developed largely as expected. Freight and logistics costs remained elevated during the quarter. Fuel prices moderated temporarily, but subsequently returned to higher levels. Overall, our view of the logistics environment remains largely unchanged from our prior commentary. The inventory rebalancing actions we previously shared progressed in the third quarter, and we saw cost pressure due to the intentional lower plant utilization. Our new integrated business planning process brought visibility to this opportunity, and we believe it will support a more efficient operating model going forward. SG&A as a percentage of net sales was up in the third quarter. In addition to some of the onetime items previously mentioned, we recognized a litigation settlement during the quarter. On an adjusted basis, SG&A as a percentage of net sales improved compared to last year, with the primary drivers being lower employee-related expenses and the timing of our marketing and advertising investments. Cost discipline remains a key focus for the business, and we will continue to select the highest return investments for our SG&A spending. Adjusted equity and earnings was comparable to the prior year. Given these factors, adjusted operating margin was 9%, up 60 basis points versus prior year. Other income was unfavorable compared to prior year with investment returns on the rabbi trust as the primary year-over-year driver. Taken together, adjusted earnings per share was $0.37, up 6% versus last year. Turning to cash flow and capital deployment. We generated $241 million of operating cash flow in the quarter, up 54% from a year ago, primarily reflecting improved inventory management and working capital performance. Capital expenditures were $68 million. We invested in infrastructure improvements along with data and technology to support long-term growth. We returned $161 million to stockholders in the quarter through dividends, fully aligned with our capital allocation framework. We remain committed to the dividend and are proud to have reached our 392nd consecutive quarterly payout. We ended the quarter in a sound financial position with ample liquidity and a conservative balance sheet. Cash on hand totaled $840 million, up $169 million since the end of fiscal 2025. This gives us flexibility to continue investing in the business while returning capital to shareholders. Let's take a moment to review our updated guidance for fiscal 2026. We expect fiscal 2026 net sales to be in the range of $12.1 billion to $12.2 billion, which represents organic growth of 1% to 2%. We narrowed and raised our full year adjusted operating income and adjusted earnings per share guidance, which now represents growth of 6% to 10% year-over-year. I'll close with a few thoughts on our progress this year. Through 3 quarters, we navigated both anticipated and new external challenges while continuing to execute against the priorities we established at the beginning of the year. Our results to date, combined with improved visibility into the fourth quarter, support our confidence in delivering our updated full year outlook. At this time, I'll turn the call over to the operator, and we'll open it up for Q&A. Operator: [Operator Instructions] Our first question from the line of Ben Theurer with Barclays. Benjamin Theurer: Jeff, John, Paul, thank you very much for your comments early on. So my first question really is picking up on the guidance. If you could help us unpack maybe the drivers of, a, the top line guidance revision? And then within that also, what on the other hand, do you think is going to improve as we go down the income statement as you're revising up your adjusted profit outlook and EPS outlook with the narrowing on the higher end of the guidance. So that would be my first question. Jeffrey Ettinger: Yes. Thank you, Ben. This is Jeff. I'll go ahead and take the question. We're going to share our thoughts about guidance. On the top line, given our year-to-date performance of plus 1% and our outlook for the fourth quarter, we think an organic net sales range of 1% to 2% is appropriate. John covered some of the current trends in his remarks, but he'll be happy to answer other questions about the top line drivers in a follow-up. I'm going to focus more on the bottom line. So on the bottom line, when we spoke to all of you after Q2, our outlook for Q4 was frankly approximately $0.40. Our updated assessment has $0.40 for Q4 now at the high end with more like $0.37 at the midpoint. What has changed? Well, for one thing, volumes. As John and Paul noted, we are experiencing some weakness in sales volumes for certain retail franchises. When this happens, we lose out on both the sales margin contribution and on the plant throughputs associated with better volumes. And even though we are seeing a better COGS environment, we don't take full advantage of it when volumes are off. This is an area that could have some upside still for the quarter if we were able to improve volumes. Our sales teams are actively focused on this, and they will have their efforts supplemented by enhanced advertising during the quarter. Another item is freight, including fuel costs. We have been dealing with it as transitory as tied to geopolitical issues, and it still may prove to be transitory. But for now, fuel costs have returned to higher levels. If they trend lower during the quarter, this also would be a benefit. We set out the year focused on improving adjusted EPS, and we are doing just that. Our new growth range remains at or above algorithm at plus 6% to plus 10% for the year. Overall, we think our revised ranges are realistic, achievable and sensible, and they represent a strong fiscal 2026 as we close out the year. Benjamin Theurer: Perfect. And then for my follow-up, obviously, in retail, we saw a rather significant volume decline. Can you maybe help us unpack that as well a little bit and maybe talk about a little bit more on the core brands, the bigger ones, how they have been performing and what's been actually driving within retail the high single-digit volume decline? John Ghingo: Yes, sure. This is John, Ben. I'll take that question. So yes, I would say retail had a mixed quarter after a relatively stronger second quarter. And to your question, I'll start with the top line. Volume was, as I mentioned in the prior call, going to be noisy for retail in the back half of the year. We certainly saw that in Q3. About half of the volume declines in retail were specifically related to whole birds, private label snack nuts, the exit of certain businesses there, which we've talked about before, as well as contract manufacturing. Beyond that half, there was a volume contraction that we expected with the elasticity impacts from the 2 rounds of retail pricing that we announced and implemented late last year and early this year. So that was another chunk of it. And then beyond that, there was some additional volume softness in a couple of businesses that we experienced in retail. So overall, I would say there was some step back in consumer takeaway across our branded retail business in what has been a choppy environment. But that being said, it was modest, right? If you look at our total Hormel consumption for the quarter, our dollar consumption was minus 1% after having been about plus 1% earlier in the year. And underneath that, we actually see really strong consumer takeaway and growth on many of our priority retail businesses. So to get to that part of your question, some of the standouts there, Jennie-O ground turkey, Hormel Entrees, those are 2 businesses that saw mid- to high single-digit consumption growth. We also saw growth on Applegate, our center store canned portfolio, Herdez, Hormel Black Label bacon. And importantly, we saw consumption growth on Planters. So if you kind of take a step back and say, okay, the focus areas of retail, we're seeing some really good consumption momentum across a number of those businesses. And while the environment is not getting easier, we continue to feel really good about our protein-centric portfolio, offering value to consumers and some of the pivots we're making around positioning and marketing those businesses. Operator: Your next question from the line of Peter Galbo with Bank of America. Peter Galbo: I guess just for the first piece of it, Paul, I think you spoke a little bit about this in terms of kind of seeing a delayed benefit of some of the lower input costs coming through. And I just -- I wanted to understand a little bit more if that's a function of, I guess, if you had weaker volume, the inventory turns a little bit slower, and so it doesn't come through as quickly. And so we will still get that benefit, but it's really more delayed into next year? Or is it, hey, we should see some deflation in inputs, but actually some other stuff has moved up on us. And so maybe it's not the same level of tailwind than we thought it was previously. I just was hoping to get a little bit of clarification on that. Paul Kuehneman: Yes, Peter, thank you. Thanks for the question. You're correct in the fact that the lower volumes did obviously impact some of the inventory turns that we're going through, and we recognize that. Also, the pork market didn't really start to decline until midway through the quarter. So it wasn't like we got a full quarter of benefit as we saw those decline in the markets from where we had thought. We are also looking, obviously, as you get into the pork markets, as I said in the prepared remarks, the lower markets help our margin profile over time, and you will see that carry forward here based on our current forecast into the upcoming quarters and into '27 as well. But not every market component has been beneficial as well. So we definitely have some headwinds still within the pork markets and the fowl commodity markets. And then obviously, foodservice and retail handle inventory differently. The foodservice piece obviously can price accordingly very quickly, while it takes a little bit longer to impact maybe some things in retail and invest in the business based on what other competitive set might be doing in certain categories. Peter Galbo: Got it. Okay. And Jeff, I guess if I could just ask on the revised top line sales guidance. I think you said year-to-date, you've kind of been running about 1% on the organic sales side. So I mean, I know the range is still 1% to 2%, but should we be erring kind of more on the lower end of that 1% to 2%, just given some of the things that John talked about for Q4, maybe some of the commodity-based pricing dynamics that are going to come in? Just want to make sure that we're kind of level set on where we kind of exit the year from a run rate standpoint on organic sales. Jeffrey Ettinger: Sure. I mean we're -- I guess we're comfortable with the range of 1% to 2%. I'd acknowledge that, okay, the first couple of quarters are plus 2%, plus 3%. We're probably not seeing that for the fourth quarter, but we're still having strong momentum on the foodservice side, and the team is hard at work at addressing some of the retail brands that had weaker performance. And so we're comfortable with that overall range. Operator: Your next question from the line of Michael Lavery with Piper Sandler. Michael Lavery: Just wondering if you could give us some of the key considerations or maybe some of the building blocks you're thinking about for fiscal '27. I realize it's early and obviously, you're not committing to anything, but anything that the market or investors might be overlooking or missing, how to think about maybe the favorable input cost carryover or carry through? Would you imagine any more inventory rebalancing? Or is that done? Any kind of breadcrumbs would be helpful. Paul Kuehneman: Yes. Michael, thanks for the question. This is Paul. You're correct. It's still early, obviously, and we're not ready to give guidance. But through our integrated business planning process that we've implemented, we are actually a little further along than normal. So I do have some color to share with you for your question. The positive side, we've got strong momentum for our foodservice segment, which we project going forward. We also are seeing benefits of evolving retail strategy, which is accelerating growth in priority brands such as Jennie-O and Applegate. And then we do have a favorable read so far for pork input cost, which can allow us to increase investments if needed. And obviously, fiscal '27 is going to include a 53rd week. Some cautionary notes that we've seen so far is that the consumer environment, we are not envisioning a meaningful improvement in the upcoming quarters. We do expect the cost input environment to remain pressured in some areas, specifically logistics expenses, grain prices and beef costs. And we've also got portfolio shaping activities, which will adjust the top line, but not on the bottom line, and that's the whole-bird turkey divestiture as well as Brazil. We're also going to continue to evaluate investment needs for the business and what capabilities can come from those investments. But while it's still early in our process, there are meaningful puts and takes to consider, and we're very optimistic about the future. Michael Lavery: Okay. That's really helpful. And just a quick follow-up on International. You laid out a few of the moving parts there and certainly some one-offs. But any sense of just how to think about a little more of the run rate going forward? Is there a kind of sense of what's ahead that you can give us that snaps back from this quarter? Or is there some other pressure that lingers? I imagine you don't want to be too specific, but just some help on how to think about the next few quarters in that segment would be great, too. Paul Kuehneman: Yes. Michael, this is Paul again. I'll take that as well. You are correct, very noisy quarter this one for International. However, we are making the right decisions here to strengthen our global opportunities and the underlying International demand, and those trends remain intact. We feel pretty good headed into the fourth quarter and into '27. I will note that the biggest issue on the numbers you see for the fourth quarter were really around the SPAM brand export sales, which were adversely impacted due to the onetime legal entity transition. This did create that noise that you see in the third quarter, but it was the right decision to support the long-term evolution and the efficiency of our global operating model. So very positive about the future headed into Q4 and '27 in International, but a very noisy quarter. Operator: Your next question is from the line of Tom Palmer with JPMorgan. Thomas Palmer: I wanted to follow up on Pete's question just on the top line, 1% and I mean, like 1.0% year-to-date organic sales growth and the range is 1% to 2%. So it kind of implies that we go from minus 2% back to positive come 4Q. And so I'm just trying to understand what are the major drivers of that sequential acceleration? Are you already seeing it quarter-to-date or more to come? John Ghingo: Tom, this is John. So I'll try to give you a little bit more color around how we're thinking about enterprise net sales performance. So first, I will call out from a foodservice perspective, we've now delivered, as we said in our prepared remarks, 12 consecutive quarters of growth. Certainly, there are a couple of dynamics sitting underneath that foodservice performance on third quarter. One was industry traffic is still muted, sluggish across many channels in foodservice and away from home. And on top of that, we did have some commodity deflation that suppressed some of the net sales growth as well in foodservice. But yet, we did put up the organic net sales growth, and we have high confidence in that business going forward. So I'll kind of lay that out. Second, from a retail perspective, we do really like the momentum we're seeing on a number of our businesses. We're seeing, I'll say, growth. We're seeing the effects of some of the changes and pivots we've made around brand positioning, marketing, shifting more into digital and e-commerce behind some of our brands, we're starting to see some of those things really gain traction. So we like that. We also start to see a little bit of a change in the lapping dynamics as we get into Q4. The private label nut exit that we've talked about a couple of quarters now will be behind us as we get into Q4. So that will also create a little bit of additional room there. So all in all, we feel good about the progress on retail, certainly more work to do, but we like the momentum we're seeing on key brands. We like our continued success on foodservice. As Paul mentioned, International was a little noisy in the quarter, but we still like our outlook there. Thomas Palmer: Great. And then on SG&A, the dollars were the lowest since 4Q '23. I know there were some cost savings that kind of took hold earlier in the year, and so maybe this was the first quarter where we saw the more full benefits of that. Just any framing of kind of that SG&A cost structure as we look forward and how sustainable this level of spend might be when we look at 3Q versus future quarters? Paul Kuehneman: Yes, Tom, this is Paul. Thanks for the question. So you are correct. Obviously, we put in a lot of things at the start of the year that Jeff has mentioned previously regarding SG&A and then some items. Those really have taken a hold here as you get through the first half and now into Q3. So you hit the nail on the head with where that's at. We're obviously continuing to drive forward and looking at SG&A, making sure that we're spending money in the appropriate spot to drive the business as well as in advertising. So part of that decrease in advertising dollar or in SG&A was in the advertising segment, which a lot of it was timing again in terms of new leadership in that area and making sure we're spending money wisely. We do expect to see some increased advertising spending here in Q4. And then obviously, a little bit too early to discuss our plans for '27 regarding the advertising spend. Operator: Your next question from the line of Max Gumport with BNP. Max Andrew Gumport: I wanted to turn back to the consumer environment. One, just to hear a bit more about what you're seeing in terms of the pressure on the consumer and how that's impacting your business and how you're looking to manage through it? And then two, just the factors behind why you're not expecting any meaningful improvement in '27? John Ghingo: Yes. Max, it's John. I'll take that question. So I would describe the consumer environment right now really is not improving. The headline for me is that consumers are still feeling quite strained with low sentiment. And that strain, a lot of it comes from those cumulative effects of inflation, which we've talked about before. I would add that high fuel prices have contributed further to that strain as this year has unfolded. So I think that's a bit of the backdrop. That being said, consumers continue to prioritize food. Overall demand for food remains resilient. And while consumers are demonstrating resilience, they're also coupling that with flexibility. And what I mean by that is consumers are increasingly focused on optimizing for value. And I don't mean value in the sense of the lowest price point, but in the sense of just being more deliberate with their dollars. So I believe what we're seeing is that a company like Hormel Foods, where we have a protein-centric portfolio and we can deliver great value propositions for breakfast, lunch, dinner, snacking, convenience, affordability, we're in a great spot to deliver on those consumer needs as they're becoming increasingly deliberate with those choices. So if you kind of step back and say, okay, how do we make sure as the consumer behavior is evolving around value and value seeking that we're evolving our portfolio to make sure we have the right offers, right message, right point of purchase, right pack at the right price is the work we're doing. And if you look at some of the success across our foodservice business as one example of that, where we continue to diversify across channels, away-from-home channels, commercial, noncommercial, we are increasingly becoming that ally for consumers to be there when they need it. And then if you look at the positioning work we're doing around our core brands on retail, we're also more and more pushing those brands into spaces where we can be a more versatile partner for consumers. So all in all, I would say consumer behavior is changing. Consumers are becoming more deliberate in this challenging environment. But frankly, it's an opportunity for us as we really believe that the convenience of our products, the affordability of our products, the taste of our products and our ability to meet consumers across a broad set of channels put us in a great spot to meet that consumer need. As far as outlook into future quarters with the consumer, I mean, the environment is volatile right now, frankly. And so our expectation is the environment will continue to be choppy. It will continue to be volatile. And so we're anticipating that the consumer is still going to be dealing with that in the months and quarters ahead. Certainly, we'll be flexible. We'll adapt as needed. Should we pick up some tailwinds in certain spots with consumer sentiment, with consumer behavior, with growth -- additional growth in away-from-home channels, those will be additional tailwinds for us. But at this point, our outlook is to assume that it remains choppy and the consumer backdrop is strained. Max Andrew Gumport: Great. And John, congrats on the appointment as CEO, and you're stepping into the role at a time when your leverage is now in a very, very comfortable position on the balance sheet. Your cash levels are quite high. So I'm curious what your view is on capital allocation and what your priorities are on that front. John Ghingo: Yes. I mean, first of all, thank you, Max. I appreciate that. And Hormel is a wonderful company with a great history, and it does have a strong balance sheet. We've always been very disciplined in our approach to capital allocation. Certainly, the dividend continues to be very important to us. And so that will continue to remain a priority for us going forward. We have also talked about the fact that the company does have a long history of M&A activity. We have been more quiet of recent years. But certainly, we continue to be open to strategic partnerships, strategic acquisitions, things that could make sense for us strategically going forward, and we do have the flexibility on our balance sheet. Operator: Your next question from the line of Heather Jones with Heather Jones Research. Heather Jones: First question is sort of just detail-ish. So just wondering if you're able to just broadly quantify the volume impact of that legal entity change. I mean would volumes -- would organic volumes have been roughly flat absent that? Paul Kuehneman: Yes, Heather, this is Paul. I don't want to get into specifics, but the majority of the decline in tonnage in International is associated with the legal entity change. Heather Jones: Okay. And then I've just taken the different questions that have been asked around input costs and demand, et cetera. But I'm just putting it all together, I wanted to make sure that we all have the appropriate takeaway. It sounds as if you all still expect lower input costs, just whether it be dark meat turkey on the pork side or whatever, to be a net positive into Q4 and '25 despite a more challenged consumer competitive environment. Is that the accurate takeaway? Paul Kuehneman: Yes, Heather, that's right. That's exactly right. Operator: Your next question from the line of Pooran Sharma with Stephens. Pooran Sharma: Wanted to maybe get a better understanding of freight costs here. And you mentioned they were still pressured. How are they relative to 2Q? And as we think about the lower commodity input cost benefit for 4Q, just wondering if that's large enough to offset freight impact? Or how we should kind of think about the balance of those 2 items? Paul Kuehneman: Thanks for the question. This is Paul here. I'll answer on the freight piece. Obviously, still elevated here for most of the quarter. We did see a temporary reduction in the fuel prices, but they later returned to the higher levels. And even as of right now, they're at the highest level since the conflict started. Our assessment of the logistics environment remains largely unchanged from the prior commentary that we've given. So freight, logistics and fuel costs continue to present those year-over-year headwinds, and those trends are reflected in the outlook. So you are correct in terms that the Q4 guide that we presented that Jeff talked about earlier is holistic with all the input cost of pork being down and freight and fuel being up. So I guess, to answer your question, all of them is freight and fuel, a little bit higher than we've seen from Q2, but overall reflected in our guidance range here for the fourth quarter. Pooran Sharma: Okay. Appreciate the color there. And I'm sorry if you got -- you gave detail on this earlier, but I wanted to ask about inventory rebalancing. I think in your prepared comments, you alluded to it being a little bit worse than expected. I was hoping you can help us dive into this a little bit. What came in kind of worse than expected? Are you able to kind of help us quantify any impact here? John Ghingo: Yes, sure. I'll kick us off on that one, and then Paul, feel free to add anything else you'd like to. So we did have some incremental costs this quarter in our supply chain. I'll come to the first point, which is what we discussed last quarter, the inventory rebalancing efforts we've been working through. Those efforts did result as we expected in lower production volumes flowing through portions of our manufacturing network. In addition to that, there were a few areas of the portfolio that faced softer category conditions during the quarter. So that contributed modestly to some lower volumes on top of the inventory rebalancing efforts. So that's kind of one piece. Separately, we did also mention that we experienced a few discrete cost headwinds in the quarter. Last quarter, you may recall that we talked about we had an exceptionally strong quarter in the turkey supply chain. We were expecting this quarter to normalize following that strong quarter. Results were a bit further pressured by higher temperatures and worse feed conversion in the quarter on turkey. And then we did have some kind of onetime severe weather-related events that created power outages in a few of our facilities. So that drove some incremental costs. But those we do really see as short-term impacts, one-timers in nature and shouldn't overshadow the capabilities we've talked about before, but the capabilities we're building for the long term in our supply chain, whether it's Hormel production systems, which we continue to drive consistent improved performance across our manufacturing network, some of the improvements we've made with data and planning tools and what Jeff alluded to earlier in terms of the enhanced collaboration and better decision-making in the enterprise, we feel really good about all of the progress in those areas we're making across our supply chain as we navigate some of these short-term headwinds. Paul Kuehneman: And I'll just add on the inventory rebalancing piece for you that it did really progress as we kind of expected. You might see inventories are up on the balance sheet, but that's really a result of operating supplies and WIP inventory and not finished goods. Finished goods is relatively flat for the quarter, and it is significantly down from last year, both in dollars and somewhat in pounds. So we thought we did a good job in terms of what we wanted to do regarding that, and most of the actions did occur in Q3. There is still some stuff in Q4, but the majority of it was in Q3. Operator: Your next question from the line of Rupesh Parikh with Oppenheimer. Rupesh Parikh: So Jeff, with this being your last earnings call, I would love to hear your perspective and any key observations you see on Hormel's prospects going forward. Jeffrey Ettinger: Well, thanks, Rupesh. I appreciate the opportunity to provide a view of what our team worked on during the past 12 months and what I think is important about that. First of all, I think it was important that we were setting a realistic top-down and bottom-up plan that was rooted in algorithm-based growth, growing from where we are rather than trying to make up for past years. I think sometimes the team maybe fell into that syndrome sometimes. Secondly, I think we were very clear about both internally and then hopefully expressed them clearly to the investment community about deploying several different levers to enhance bottom line performance. We had solid top line momentum, but the bottom line hadn't been coming along with it. So these include pricing, and we executed successfully 2 waves of that. The team has been focusing on mix. We've been able to generate further efficiency gains, and then we did take some significant SG&A actions and talked about that earlier on the call as well. As John just alluded to, I think it's been important that we've improved the coordination of what is really a recently centralized business. It's only been 3 or 4 years since it used to be Jennie-O and Grocery Products and kind of separately run segments and now it is run on a much more centralized basis. There are very good advantages to doing that in terms of scale and efficiency and in terms of your importance to customers. But it really was important that we got the right people in the right room at the right time with the right data to make adjustments based on changing market conditions. And then lastly, sort of a significant amount of side work in addition to sort of running the business on a day-to-day basis, we really did want to take this opportunity to look at the portfolio and see if we could make some more significant moves in getting ourselves positioned for the future. And so the moves with Justin's and with whole birds and with Brazil now really allow the company to better focus and reduce volatility and suboptimal performance in certain areas. Operator: There are no further questions at this time. I will now turn the call back to Jeff Ettinger, Interim Chief Executive Officer, for closing remarks. Jeffrey Ettinger: Well, I'll just take this opportunity to thank you all for your attention during the year. I think the company has established some solid momentum. And obviously, we think we have an advantaged position going forward with our protein-centric model. Our foodservice business continues to hum along and retail has several segments that are doing well also. And ultimately, I think we'll get that rolling in the same way also. It was a choppier quarter for International. But overall, we have really great growth prospects there. We've redoubled our attention in the Asia Pacific region with our strong leader, Swen Neufeldt, now heading to Singapore to run it directly there. So I'm very optimistic in the future of the company, and I'll be actively interested in how it goes because I'll remain on the Board of Directors and remain a shareholder. So thank you all for your attention today. Operator: This concludes today's call. Thank you for attending. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Hormel (HRL) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Adjusted Earnings Per Share (EPS): $0.37, up 6% versus last year. Organic Net Sales: Declined 2% in the third quarter compared to the prior year. Gross Profit: $472 million in the quarter. Gross Margin: 15.9%. Adjusted Operating Margin: 9%, up 60 basis points versus prior year. Operating Cash Flow: $241 million in the quarter, up 54% from a year ago. Capital Expenditures: $68 million. Dividends: Returned $161 million to stockholders, marking the 392nd consecutive quarterly payout. Cash on Hand: $840 million, up $159 million since the end of fiscal 2025. Fiscal 2026 Net Sales Guidance: Expected to be in the range of $12.1 billion to $12.2 billion, representing organic growth of 1% to 2%. Fiscal 2026 Adjusted EPS Guidance: Raised and narrowed to a range of $1.45 to $1.51, representing growth of 6% to 10% year-over-year. Warning! GuruFocus has detected 5 Warning Signs with HRL. Is HRL fairly valued? Test your thesis with our free DCF calculator. Release Date: August 27, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Adjusted earnings per share increased 6% year-over-year, with adjusted operating margins expanding 60 basis points to 9%. Foodservice segment delivered its 12th consecutive quarter of organic net sales growth, with profit growth outpacing sales and continued margin expansion. Priority retail brands like Jennie-O ground turkey, Applegate, Hormel Chili, and Planters showed strong consumption growth and marketplace momentum. The company raised and narrowed its fiscal 2026 adjusted EPS guidance to $1.45-$1.51, reflecting confidence in delivering growth at or above its long-term algorithm. Operating cash flow increased 54% to $241 million, driven by improved inventory management and working capital performance, while maintaining a strong balance sheet with $840 million in cash. Organic net sales declined 2% in Q3, impacted by portfolio shaping actions, softer commodity markets, and a challenged consumer environment. Retail volumes declined significantly, with about half of the decline from deliberate exits (whole bird turkey, private label snack nuts) and additional softness from pricing elasticities and weak consumer takeaway. International segment was negatively impacted by a loss on the Brazil divestiture, an impairment on a minority investment in Indonesia, and a one-time legal entity transition that delayed SPAM export sales. Supply chain costs increased due to inventory rebalancing, lower production volumes, higher temperatures affecting turkey yields, and severe weather-related power outages. Freight and fuel costs remained elevated, with fuel prices returning to higher levels, creating ongoing year-over-year headwinds and pressuring margins. Q: Can you unpack the drivers behind the revised top-line guidance and the improved profit outlook?A: Jeff Ettinger, Interim CEO, explained that the top-line range of 1% to 2% reflects year-to-date performance and Q4 expectations. On the bottom line, the Q4 outlook was revised down to approximately $0.37 at the midpoint from $0.40, due to weaker retail volumes impacting sales margin and plant throughput. However, a better cost of goods sold environment and potential upside from improved volumes or lower fuel costs could provide benefits. The revised adjusted EPS growth range of 6% to 10% remains at or above the company's long-term algorithm. Q: What drove the significant volume decline in the retail segment, and how are core brands performing?A: John Ghingo, President and CEO Elect, stated that about half of the retail volume decline was due to portfolio shaping actions, including the exit of whole bird turkey, private label snack nuts, and contract manufacturing. The remainder was driven by pricing elasticities from two rounds of retail pricing and additional softness in a few businesses. Despite this, consumption growth was strong for priority brands like Jennie-O ground turkey, Hormel Entrees, Applegate, and Planters, with overall Hormel dollar consumption down only 1%. Q: Is the delayed benefit of lower input costs a function of slower inventory turns, and should we expect deflation tailwinds?A: Paul Kuehneman, Interim CFO, clarified that lower volumes impacted inventory turns, and the pork market decline occurred later in the quarter, limiting the benefit. While lower pork prices will help margins over time, not all commodity markets are favorable, with headwinds in beef and other areas. The benefits are expected to carry forward into upcoming quarters and fiscal 2027. Q: What are the key building blocks for fiscal 2027, and are there any favorable or cautionary factors to consider?A: Paul Kuehneman provided early color, citing strong momentum in Foodservice, benefits from the evolving retail strategy, and favorable pork input costs as positives. Fiscal 2027 will also include a 53rd week. Cautionary notes include no meaningful improvement in the consumer environment, pressured input costs in logistics, grain, and beef, and portfolio shaping activities that will adjust the top line but not the bottom line. Q: Can you provide more detail on the International segment's noisy quarter and its run rate going forward?A: Paul Kuehneman attributed the noise to the divestiture of Brazil operations, an impairment on a minority investment in Indonesia, and a one-time legal entity transition that adversely impacted SPAM export sales recognition. Despite these items, underlying demand remains resilient, and the company is positive about the segment's future, with the legal entity transition supporting long-term global operating efficiency. Q: What are the drivers of the sequential acceleration in organic sales from Q3's -2% to positive growth in Q4?A: John Ghingo highlighted continued growth in Foodservice, momentum in retail priority brands, and the lapping of the private label nut exit in Q4 as key drivers. He expressed confidence in the progress across the enterprise, despite a choppy consumer environment. Q: How sustainable is the lower SG&A spend, and what is the outlook for advertising?A: Paul Kuehneman confirmed that cost savings actions taken earlier in the year have taken hold, with SG&A dollars at their lowest since Q4 2023. The decrease was partly due to timing in advertising spend, but the company expects increased advertising in Q4. Plans for fiscal 2027 advertising spend are still being evaluated. Q: What are you seeing in the consumer environment, and why no meaningful improvement expected in 2027?A: John Ghingo described consumers as strained due to cumulative inflation and high fuel prices, leading to more deliberate value-seeking behavior. He noted that Hormel's protein-centric portfolio is well-positioned to meet these needs. The environment is expected to remain choppy and volatile, with no significant improvement anticipated in the near term. Q: What are your capital allocation priorities given the strong balance sheet and high cash levels?A: John Ghingo reaffirmed the importance of the dividend as a priority, while remaining open to strategic M&A opportunities. He noted the company's long history of disciplined M&A and the flexibility provided by the balance sheet to pursue strategic partnerships or acquisitions that make sense. Q: Can you quantify the volume impact of the legal entity change in International, and are lower input costs still a net positive for Q4?A: Paul Kuehneman stated that the majority of the decline in international tonnage was associated with the legal entity change, without providing specifics. He confirmed that lower input costs, including pork and dark meat turkey, are expected to be a net positive in Q4 and into fiscal 2027, despite a challenged consumer environment. Q: How are freight costs trending relative to Q2, and will lower commodity costs offset the freight impact in Q4?A: Paul Kuehneman noted that freight, logistics, and fuel costs remain elevated, with fuel prices at their highest level since the conflict started. These headwinds are reflected in the Q4 guidance, which holistically accounts for lower pork costs and higher freight and fuel expenses. Q: What drove the incremental supply chain costs, and is the inventory rebalancing complete?A: John Ghingo explained that inventory rebalancing led to lower production volumes as expected, with additional softness in some categories. Discrete cost headwinds included higher temperatures and worse feed conversion in turkey, plus severe weather-related power outages. Paul Kuehneman added that most inventory rebalancing actions occurred in Q3, with finished goods inventory down significantly year-over-year. Q: As this is your last earnings call, what are your key observations on Hormel's prospects?A: Jeff Ettinger highlighted the importance of setting realistic, algorithm-based growth plans and deploying multiple levers to enhance bottom-line performance, including pricing, mix, efficiency gains, and SG&A actions. He emphasized improved coordination across the recently centralized business and significant portfolio moves, such as divesting Justin's, whole bird turkey, and Brazil, to better focus on higher-growth For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Hormel Foods Corporation HRL reported third-quarter fiscal 2026 adjusted earnings of 37 cents per share, up 5.7% year over year and above the Zacks Consensus Estimate of 36 cents. Net sales fell 2.4% to $2,961.3 million and missed the consensus mark of $3,047 million. Organic net sales decreased 2% in the quarter. Total volume declined 7.4%, while organic volume fell 7.1%. Hormel Foods Corporation price-consensus-eps-surprise-chart | Hormel Foods Corporation Quote Adjusted selling, general and administrative expenses fell 11.6% to $216.9 million from $245.2 million. Advertising investments were $34 million compared with $41 million a year earlier.Adjusted operating income increased 4.7% year over year to $266.2 million. Adjusted operating margin expanded 60 basis points to 9% from 8.4% in the year-ago quarter. Retail net sales declined 4.3% year over year to $1,779.4 million, while organic net sales fell 3.3%. Volume decreased 9.1% as commodity turkey and private-label snack nuts pressured results. Strong performance in value-added turkey offerings, contract manufacturing and Planters snack nuts partly offset the weakness. SPAM products, Applegate natural and organic meats and Hormel chili also delivered growth, while segment profit decreased 3.7% to $118.1 million as lower sales and higher logistics expenses outweighed lower SG&A costs.Foodservice net sales rose 1.6% to $1,003.2 million, with organic net sales up 1.8%. Volume declined 1.5%, but the segment still generated its 12th straight quarter of organic net sales growth. Growth was broad-based and led by premium prepared proteins, branded pepperoni and Jennie-O turkey. Segment profit increased 2.7% to $144.5 million as higher sales and favorable pork input costs more than offset higher logistics and SG&A expenses.International net sales declined 4.7% to $178.7 million, while organic net sales fell 4.4%. Volume dropped 10.8%, and the timing of certain SPAM export sales was hurt by a one-time legal-entity transition. Segment loss was $29.2 million against $18.9 million of profit in the year-ago quarter, largely because of a non-cash impairment charge. Hormel Foods ended the quarter with $839.6 million in cash and cash equivalents, up from $670.7 million at the end of fiscal 2025. Inventories were $1.8 billion, while the company returned $161 million to its shareholders through dividends during the quarter.Cash flow from operations increased 54% year over year to $240.6 million. Capital expenditures totaled $68.2 million, with spending focused on infrastructure enhancements and data and technology investments. Hormel Foods lowered fiscal 2026 net sales guidance to $12.1-$12.2 billion from $12.2-$12.5 billion and narrowed organic net sales growth expectations to 1-2% from 1-4%. The revised view reflects the external environment and the fiscal fourth-quarter impact of the Brazil divestiture. The transaction closed early in the fiscal fourth quarter, and its expected impact is reflected in the updated guidance. The company raised adjusted operating income guidance to $1.08-$1.12 billion from $1.06-$1.12 billion. Adjusted earnings per share guidance was raised and narrowed to $1.45-$1.51 from $1.43-$1.51, implying growth of 6-10%.This Zacks Rank #4 (Sell) stock has tumbled 7.3% over the past month compared with the industry’s decline of 6.9%. Image Source: Zacks Investment Research The Chefs' Warehouse, Inc. CHEF distributes specialty food and center-of-the-plate products in the United States, the Middle East and Canada. At present, CHEF flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The consensus estimate for Chefs' Warehouse’s current fiscal-year sales and earnings implies growth of 10.6% and 33.7%, respectively, from the year-ago reported figures. Chefs' Warehouse delivered a trailing four-quarter earnings surprise of 30.4%, on average.The Vita Coco Company, Inc. COCO develops, manufactures, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. COCO currently sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 21.9%, on average.The Zacks Consensus Estimate for Vita Coco’s current fiscal-year sales and earnings indicates growth of 31.6% and 64.7%, respectively, from the year-ago reported numbers. Darling Ingredients Inc. DAR develops, produces and sells sustainable natural ingredients from edible and inedible bio-nutrients in North America, Europe, China, South America and internationally. At present, Darling Ingredients holds a Zacks Rank of 2 (Buy). DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average. The consensus estimate for Darling Ingredients’ current fiscal-year sales and earnings implies growth of 11.5% and 926.5%, respectively, from the year-ago figures. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Hormel Foods Corporation (HRL) : Free Stock Analysis Report Vita Coco Company, Inc. (COCO) : Free Stock Analysis Report Darling Ingredients Inc. (DAR) : Free Stock Analysis Report The Chefs' Warehouse, Inc. (CHEF) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management characterized Q3 as a solid quarter of earnings growth despite mixed top-line results driven by deliberate portfolio shaping and a pressured consumer environment. Foodservice delivered its 12th consecutive quarter of organic growth, outperforming industry traffic trends through a focus on premium prepared proteins and branded pepperoni. Retail performance was impacted by the divestiture of the whole-bird turkey business and exits from private label snack nuts, alongside pricing elasticities from recent price increases. Strategic momentum remains strong in priority brands like Jennie-O ground turkey, Applegate, and Planters, which benefited from targeted digital marketing and in-store activations. International results were weighed down by a one-time legal entity transition affecting SPAM export sales and an impairment in Indonesia, though underlying demand remains resilient. Operational inefficiencies and inventory rebalancing actions created short-term cost pressures, but management believes these actions support a more efficient long-term operating model. The divestiture of Brazil operations reflects a strategic pivot to sharpen focus on the higher-potential Asia Pacific region, supported by relocating leadership to Singapore. Adjusted EPS guidance was raised and narrowed to $1.45 to $1.51, reflecting confidence in delivering growth at or above the long-term algorithm. Full-year organic net sales growth expectations were tightened to 1% to 2% to better reflect current market volatility and consumer sentiment. Management anticipates the consumer environment will remain choppy and strained into fiscal 2027, with no expectation of meaningful near-term improvement. Future margin expansion is expected to be supported by lower pork input costs, though benefits are delayed as the company works through current inventory positions. Fiscal 2027 outlook includes a 53rd week and assumes continued headwinds from logistics expenses, grain prices, and elevated beef costs. The divestiture of Brazil operations closed early in the fourth quarter, removing a subscale business to reduce volatility and focus resources. A one-time legal entity transition for SPAM exports adversely impacted Q3 International results but is expected to improve global operating efficiency long-term. Supply chain costs were pressured by severe weather-related power outages and biological headwinds in the turkey business, including poor feed conversion due to high temperatures. Inventory rebalancing efforts resulted in intentional lower plant utilization, creating short-term cost pressure to achieve better long-term working capital alignment. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that while the COGS environment is improving, lower retail volumes prevent the company from taking full advantage of better plant throughput. The Q4 outlook assumes fuel and freight costs remain elevated due to geopolitical issues, though any moderation would provide potential upside. Approximately half of the retail volume decline was attributed to intentional exits from whole birds and private label nuts. The remaining decline was driven by anticipated pricing elasticities and a modest step back in consumer takeaway in a choppy environment. Lower pork prices only began to impact the P&L midway through Q3; management expects a greater portion of these benefits to realize in future quarters. Inventory turns were slowed by weaker volumes, delaying the recognition of lower-cost inputs in the current period. The dividend remains a top priority, supported by a strong balance sheet and high cash levels. Management remains open to strategic M&A and partnerships now that leverage is in a comfortable position following a period of relative inactivity.

Hormel Foods stock has delivered weak long term returns over the past five years, yet the valuation checks still suggest the shares are not obviously cheap. For investors trying to understand where value may emerge next, the recent share price softness sits against a backdrop of mixed signals on what you are paying for the business. Over the past 5 years, Hormel Foods has declined about 38%, which raises the question of whether the market has already priced in many of the concerns around the business. The appointment of Ash Bhumbla as chief financial officer can support fresh thinking on capital allocation and efficiency, while any disappointment on margin resilience in the core food portfolio may weigh further on how the stock is valued. With a low value score of 2 out of 6, Hormel Foods currently leans expensive on the broader set of valuation checks rather than looking like a clear bargain. The issue now is whether Hormel Foods is still priced for a resilience story that its long term share performance no longer supports. Broaden your options beyond Hormel Foods by scanning a curated list of resilient companies in our 75 resilient stocks with low risk scores that may be better suited to navigating mixed share price periods. The P/E ratio is a useful measure for Hormel Foods because earnings remain a key anchor for how investors value a mature food business. Hormel Foods currently trades on a P/E of 27.9x, which is above the Food industry average of 17.9x and higher than the peer group average of 16.3x. This means investors are paying a higher price for each dollar of earnings than for many other food stocks. The fair P/E ratio for Hormel Foods, based on factors such as its margins, scale and risk profile, is estimated at 20.3x. That is below the current 27.9x, which indicates that the stock is priced at a premium even when using a tailored benchmark rather than simple industry averages. Despite the recent appointment of Ash Bhumbla as CFO, which may influence expectations around profitability and capital discipline, the market is assigning a valuation that already reflects a relatively full earnings multiple. On the P/E multiple, Hormel Foods stock currently appears overvalued compared with both its estimated fair ratio and wider food industry peers. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Hormel Foods connect this valuation puzzle to specific assumptions about the future, including what would need to happen to growth, margins and earnings for the stock to be worth materially more or less than today. Instead of leaving you with a single ratio or model output, they explain the underlying future that number relies on so you can track how Hormel Foods' actual progress compares with that path over time on the Community page. Share a narrative on Hormel Foods' stock to present your own number-driven view on whether Ash Bhumbla's appointment as chief financial officer supports the current valuation. Be one of the first voices in the Simply Wall St community to set out a clear thesis and track how it compares as new results and news arrive. Do you think there's more to the story for Hormel Foods? Head over to our Community to see what others are saying! Hormel Foods currently screens as overvalued on market multiples, even after a weak 5 year share return. The stock asks you to pay up relative to food sector peers, so the hurdle for improving margins and capital efficiency is high. For many investors the real question is whether Hormel Foods can defend and grow profitability enough to justify that premium, or whether the P/E multiple eventually drifts closer to the industry. That margin and earnings path is what will likely decide whether today’s pricing proves resilient or leaves limited room for upside. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include HRL. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Hormel Foods Corporation HRL is likely to witness the growth of both top and bottom lines when it reports third-quarter fiscal 2026 earnings on Aug. 27. The Zacks Consensus Estimate for revenues is pegged at $3.05 billion, indicating growth of 0.5% from the prior-year quarter’s reported figure. The consensus mark for earnings has remained unchanged over the past 30 days at 36 cents per share, which implies a 2.9% increase from the figure reported in the year-ago quarter. HRL has a trailing four-quarter earnings surprise of 3.2%, on average. Hormel Foods Corporation price-consensus-eps-surprise-chart | Hormel Foods Corporation Quote Hormel Foods Corporation’s third-quarter fiscal 2026 performance is likely to have benefited from continued strength across its protein-focused portfolio. Retail demand has remained healthy across priority brands, with Jennie-O ground turkey, Applegate and Hormel Black Label bacon supporting favorable mix. Pricing actions implemented earlier in the year are also likely to have aided sales and profitability, while improving turkey manufacturing performance might have provided operational support.Foodservice is likely to have remained an important growth driver, supported by branded pepperoni, premium prepared proteins and customized solutions. The segment has been resilient despite soft away-from-home traffic, aided by broad channel exposure and solutions addressing affordability and labor needs. Recent innovation, including Calabrian chili pizza toppings, might have supported customer engagement. International performance is likely to have benefited from SPAM exports and continued strength in China.The Zacks Consensus Estimate for the Foodservice segment’s third-quarter sales is pegged at $1,004 million, which indicates an increase of 1.7% from the figure recorded in the year-ago period. The consensus mark for the International segment’s sales presently stands at $201 million, implying 7.5% growth from $187 million recorded in the year-ago period. However, several pressures might have limited earnings growth. Consumers remained cautious, while weakness in higher-priced nuts such as cashews reflected sensitivity to inflation and value. A full quarter of elevated fuel expenses, higher logistics costs and volatile pork and beef inputs are likely to have pressured margins. Targeted inventory rebalancing across certain ambient products, including canned items and Skippy, also resulted in lower plant utilization, creating an additional third-quarter cost headwind. Our proven model doesn’t conclusively predict an earnings beat for Hormel Foods this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. Hormel Foods carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. Here are some companies worth considering, as our model shows that these have the right combination of elements to beat on earnings this reporting cycle.The J. M. Smucker Company SJM currently has an Earnings ESP of +1.77% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for J. M. Smucker’s upcoming quarter’s earnings per share is pegged at $2.21, implying 16.3% year-over-year growth. The consensus estimate for quarterly revenues is pegged at $2.11 billion, which indicates a decrease of 0.4% from the figure reported in the prior-year quarter. SJM delivered a trailing four-quarter earnings surprise of 1.5%, on average.Burlington Stores, Inc. BURL currently has an Earnings ESP of +1.84% and a Zacks Rank of 3. The Zacks Consensus Estimate for Burlington's upcoming quarter’s earnings per share is pegged at $2.18, which implies 37.1% growth year over year. The consensus estimate for the quarterly revenues is pinned at $3.03 billion, which indicates 12% growth from the figure reported in the prior-year quarter. BURL delivered a trailing four-quarter earnings surprise of 14%, on average.Costco Wholesale Corporation COST currently has an Earnings ESP of +1.45% and a Zacks Rank of 3. The Zacks Consensus Estimate for its upcoming quarter’s revenues is pegged at $94.46 billion, indicating a 9.6% rise from the figure reported in the prior-year quarter.The consensus estimate for Costco’s earnings is pegged at $6.51 per share, implying 10.9% growth from the year-ago quarter. COST delivered a trailing four-quarter earnings surprise of 1%, on average. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Hormel Foods Corporation (HRL) : Free Stock Analysis Report Costco Wholesale Corporation (COST) : Free Stock Analysis Report The J. M. Smucker Company (SJM) : Free Stock Analysis Report Burlington Stores, Inc. (BURL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Tyson Foods (TSN) came out with quarterly earnings of $0.99 per share, missing the Zacks Consensus Estimate of $1.03 per share. This compares to earnings of $0.91 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -3.88%. A quarter ago, it was expected that this meat producer would post earnings of $0.76 per share when it actually produced earnings of $0.87, delivering a surprise of +14.47%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Tyson, which belongs to the Zacks Food - Meat Products industry, posted revenues of $13.87 billion for the quarter ended June 2026, missing the Zacks Consensus Estimate by 1.92%. This compares to year-ago revenues of $13.88 billion. The company has topped consensus revenue estimates just once over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Tyson shares have lost about 1.1% since the beginning of the year versus the S&P 500's gain of 9.4%. While Tyson has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Tyson was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.21 on $14.4 billion in revenues for the coming quarter and $4.08 on $56.57 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Food - Meat Products is currently in the bottom 4% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Hormel Foods (HRL), another stock in the same industry, has yet to report results for the quarter ended July 2026. This maker of Spam canned ham, Dinty Moore stew and other foods is expected to post quarterly earnings of $0.36 per share in its upcoming report, which represents a year-over-year change of +2.9%. The consensus EPS estimate for the quarter has been revised 0.6% lower over the last 30 days to the current level. Hormel Foods' revenues are expected to be $3.06 billion, up 0.8% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tyson Foods, Inc. (TSN) : Free Stock Analysis Report Hormel Foods Corporation (HRL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Austin, Minnesota-based Hormel Foods Corporation (HRL) is a prominent food company that develops, manufactures, markets, and distributes a wide range of meat and packaged food products. Valued at $13.9 billion by market cap, the company serves retail, foodservice, and international customers, with a portfolio spanning refrigerated foods, grocery products, turkey, and value-added protein offerings. The diversified food giant is expected to announce its fiscal third-quarter earnings for 2026 in the near future. Ahead of the event, analysts expect HRL to report a profit of $0.36 per share on a diluted basis, up 2.9% from $0.35 in the year-ago quarter. The company surpassed the consensus estimates in three of the last four quarters while missing the forecast on another occasion. Dear SpaceX Stock Fans, Mark Your Calendars for August 6 Amazon Stock Just Hit a Major Hurdle Ahead of Earnings Elon Musk Just Revealed a Quiet Win for Tesla’s AI Ambitions Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines. For the current year ending in October 2026, analysts expect HRL to report EPS of $1.50, up 9.5% from $1.37 in fiscal 2025. Its EPS is expected to rise 3.3% year over year to $1.55 in fiscal 2027. HRL stock has significantly underperformed the S&P 500 Index’s ($SPX) 16.5% gains over the past 52 weeks, with shares down 13.6% during this period. Similarly, it notably underperformed the State Street Consumer Staples Select Sector SPDR ETF’s (XLP) 3.4% gains over the same time frame. Hormel Foods has trailed the broader market over the past year as persistent demand and margin pressures weighed on investor sentiment. Shrinking sales volumes signaled soft consumer demand, while its relatively thin margins and declining earnings despite flat revenue raised concerns about the company's ability to restore profitable growth. Analysts’ consensus opinion on HRL stock is cautious, with an overall “Hold” rating. Out of 10 analysts covering the stock, two advise a “Strong Buy” rating, and eight give a “Hold.” HRL’s average analyst price target is $26.75, indicating a potential upside of 5.7% from the current levels. On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com