Hormel Foods Corporation (HRL) Earnings & Analysis

Latest quarter

Hormel Foods reported Q3 FY2026 revenue of $3.0 billion, compared with $3.0 billion a year earlier, and the consensus also counted $3.0 billion of revenue; the company’s revenue as counted by the consensus was −2.80% against that estimate. The company reported adjusted EPS, as the consensus counts it, of $0.37, above the consensus adjusted EPS estimate of $0.36 by 2.78%.

The filing shows revenue declined −2.36% year over year, while diluted EPS fell to $0.11 from $0.33. Hormel Foods said adjusted diluted EPS increased 6% to $0.37, while reported earnings before income taxes declined 56%, primarily reflecting a $56 million loss related to the Brazil divestiture, a $48 million non-cash impairment charge and a $38 million litigation settlement.

Hormel Foods said Foodservice sales growth was offset by declines in Retail and International, with commodity turkey, bacon and selected private-label snack-nut exits weighing on organic sales. The filing shows gross margin was 15.9%, versus 16.1%, and operating margin was 3.75%, versus 7.91%. Hormel Foods reported free cash flow of $175.1 million, compared with $84.5 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Jeff Ettinger said Q3 adjusted EPS increased 6% from a year earlier, while organic net sales declined amid portfolio-shaping actions, reduced commodity markets and a pressured consumer environment. He said the company raised and narrowed its FY2026 adjusted EPS outlook after its first-nine-month performance and expectations for the fourth quarter.

John Ghingo said Foodservice delivered its 12th consecutive quarter of organic net sales growth, supported by premium prepared proteins and branded pepperoni, despite softer traffic and lower commodity-based pricing in portions of the business. He said Foodservice profit growth outpaced sales and the segment expanded margin. Ghingo said Retail’s year-over-year sales and volume were affected by the whole-bird turkey divestiture, exits from selected private-label snack-nut products, pricing elasticities and a challenging consumer environment.

When analysts asked about Retail volume, Ghingo said about half of the decline related to whole birds, private-label snack nuts, business exits and contract manufacturing. He said the remainder included expected pricing elasticity and additional softness in some businesses, while he cited consumption growth in Jennie-O ground turkey, Hormel Entrees, Applegate, Hormel Black Label Bacon and Planters. Ghingo said the company was moving more Retail marketing spending toward retailer media and digital channels.

Ghingo said consumers remained strained and were increasingly deliberate in seeking value, and he said the company expected the environment to remain choppy. Kuehneman said Hormel Foods was not anticipating meaningful improvement in the consumer environment over the upcoming quarters and expected continued pressure from logistics expenses, grain prices and beef costs.

Kuehneman said lower volumes and operating inefficiencies affected gross-margin improvement in Q3, while lower pork prices began benefiting results late in the quarter. He said inventory rebalancing, lower plant utilization, elevated freight and logistics costs, and higher beef costs affected the quarter. On International, Kuehneman said the Brazil sale, an Indonesia minority-investment impairment and a one-time legal-entity transition affecting certain SPAM export-sales recognition affected reported results; he said the Brazil transaction closed early in Q4.

Guidance

Hormel Foods raised and narrowed FY2026 adjusted EPS guidance to $1.45–$1.51 from its prior range of $1.43 to $1.51. The company tightened its FY2026 organic net sales growth expectation to 1.00%–2.00% from 1% to 4%. Hormel Foods raised adjusted operating income guidance to $1.1 billion–$1.1 billion, representing growth of 6.00%–10.0%, and updated GAAP operating income guidance to $830.0 million–$870.0 million and GAAP EPS guidance to $1.06–$1.12.