Wondering if Hormel Foods is a bargain buy or an overhyped name? Let’s break down what the numbers might really be telling us about its value.
While Hormel’s share price has been under some pressure lately, dropping 0.8% over the past week and 7.1% in the last month, there is always potential for sentiment to shift in a market like this.
Recent headlines have put the spotlight on shifting consumer preferences and food industry consolidation, both of which are fueling new strategies across the sector. That is important context for Hormel’s shares, since the company sits at the intersection of changing retail trends and evolving supply chains.
On our 6-point valuation scale, Hormel scores a 5/6. This already suggests a lot, but our next section will dig deeper into traditional value metrics and, even better, an approach that reveals what those numbers might miss.
Find out why Hormel Foods’s -21.8% return over the last year is lagging behind its peers.
The Discounted Cash Flow (DCF) model is a standard approach for valuation that estimates a company’s worth by projecting its future cash flows and discounting them to today’s dollars. Essentially, this method asks, “What are all of Hormel Foods’ future profits worth in today’s money?”
Hormel Foods has a current Free Cash Flow (FCF) of about $653 million, and analysts expect this figure to continue growing over the next several years. In 2027, FCF is projected to be around $858 million. The DCF model stretches these forecasts out even further, with the ten-year FCF projection hitting approximately $1.16 billion by 2035. It is important to note that numbers beyond 2027 are based on longer-term estimates and growth assumptions.
Using the 2 Stage Free Cash Flow to Equity approach, the model estimates Hormel’s fair value at $42.40 per share. With the stock trading at a 47.4 percent discount to this intrinsic value, the numbers suggest the shares are fundamentally undervalued by the market at current prices.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Hormel Foods is undervalued by 47.4%. Track this in your watchlist or portfolio, or discover 906 more undervalued stocks based on cash flows.
HRL Discounted Cash Flow as at Nov 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Hormel Foods.
The Price-to-Earnings (PE) ratio is one of the most widely used valuation tools for profitable companies like Hormel Foods. It provides a quick snapshot of how much investors are willing to pay today for each dollar of the company’s earnings. This metric is especially useful in established sectors, such as food, where companies tend to generate steady profits over time.
However, figuring out what counts as a “fair” PE ratio is not always straightforward. Higher expected growth and lower perceived risk generally justify a higher PE, while slower growth or higher risk tends to depress the multiple. It is important to consider more than just today’s number in isolation.
Hormel Foods currently trades at a PE ratio of 16.27x. That is below the industry average of 19.46x but higher than the peer average of 8.46x. To put this into proper context, Simply Wall St’s Fair Ratio for Hormel comes in at 16.68x. The Fair Ratio is a proprietary metric that goes beyond simple comparisons with peers or the industry. It incorporates important variables like future earnings growth, profit margins, risk factors, and Hormel’s market size, producing a more complete picture of what the stock should realistically be worth.
Comparing Hormel’s actual PE with its Fair Ratio, the numbers are close with just a 0.41 difference. This suggests that based on these tailored factors, the stock is trading near what would be considered fair value using the PE approach.
Result: ABOUT RIGHT
NYSE:HRL PE Ratio as at Nov 2025
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Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives, a powerful, story-driven approach offered on Simply Wall St’s Community page.
A Narrative is a concise story you create to connect your unique perspective on a company with specific numbers: your fair value estimate and what you believe future revenue, earnings, and profit margins will be. Instead of just relying on past financial ratios or analyst benchmarks, Narratives let you spell out the “why” behind your numbers, tying Hormel Foods’ business context, market changes, and risks directly to a real-world forecast.
This framework links a company’s evolving story to your forecast and, from there, to a clear fair value. It makes it easy to see how current news or earnings could change your outlook. Narratives are updated dynamically as new information arrives, keeping your analysis relevant and actionable for investment decisions. They are used by millions of investors on Simply Wall St.
For Hormel Foods, for example, one investor might be bullish, seeing opportunities from health-focused product innovation and assign a high fair value, while another focuses on industry headwinds or weak profit guidance and sets a much lower price. Narratives put these perspectives side by side, helping you decide which story and assessment fits your conviction.
Do you think there’s more to the story for Hormel Foods? Head over to our Community to see what others are saying!
NYSE:HRL Community Fair Values as at Nov 2025
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.
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