Hormel Foods Shares Climb on Upbeat 2026 Earnings Outlook
The food producer's strong full-year guidance overshadowed a mixed fourth-quarter report that saw revenues miss expectations and profits decline.
Hormel Foods Corp. (HRL) shares rose in trading after the company issued an optimistic financial outlook for fiscal year 2026, signaling a potential recovery after a challenging year marked by inflationary pressures and declining profits.
Investors looked past a mixed fourth-quarter earnings report, instead focusing on guidance that projects both earnings and revenue will surpass current Wall Street expectations. For its upcoming fiscal year, Hormel anticipates adjusted earnings per share in the range of $1.43 to $1.51 on revenue of $12.2 billion to $12.5 billion. The midpoints of these ranges are notably above the analyst consensus of $1.37 per share and $12.14 billion in revenue, respectively, sparking renewed investor confidence in the maker of Spam and Planters nuts.
The forward-looking guidance provided a much-needed lift for the stock, which has fallen nearly 30% over the past year. In early trading following the announcement, Hormel shares climbed approximately 4%.
For the fourth quarter ending in October, Hormel reported adjusted earnings of $0.32 per share, which was in line with analyst estimates. However, revenue for the quarter was $3.2 billion, a 1.5% year-over-year increase but slightly below the consensus forecast of $3.24 billion. On a GAAP basis, the company posted a net loss, impacted by significant non-cash impairment charges totaling $234 million related to a minority investment and certain intangible assets, according to its official earnings release.
Despite the mixed results, the company's leadership emphasized a return to growth. "We finished fiscal 2025 with solid top-line growth, driven by the relevance of our brands and our value-added portfolio," said Jeff Ettinger, Hormel’s interim Chief Executive Officer. He acknowledged that profitability remained challenged by persistent input cost inflation but expressed confidence in the company's strategic direction.
The Foodservice segment was a bright spot in the quarterly results, posting organic sales growth of 6.5%. This performance indicates robust demand from restaurants, schools, and other out-of-home dining venues. However, the Retail segment, which includes its iconic grocery brands, saw its adjusted profit fall 23% even as sales ticked up by 1%, highlighting the margin pressure the company has faced from higher commodity and operational costs.
Analysts have maintained a cautious stance on Hormel, with a consensus "Hold" rating on the stock. Before the earnings release, many had pointed to the continued pressure from input costs as a primary headwind. However, the strong 2026 forecast may lead to revised estimates. The company's average one-year price target stands at $26.44, suggesting potential upside from its current levels.
In a move underscoring its long-term stability, Hormel also announced its 60th consecutive annual dividend increase. The company raised its quarterly payout by 1% to an annualized rate of $1.17 per share, a signal of the board's confidence in its future cash flow. As Hormel heads into 2026, investors will be watching closely to see if its "Transform and Modernize" initiative can deliver the projected cost savings and margin improvements needed to turn its optimistic guidance into reality.