Hormel Foods Foodservice Growth: Is This a Key Earnings Lever?

Hormel Foods Corporation’s (HRL) Foodservice segment continues to stand out as a structurally important earnings driver, underpinned by measurable top-line momentum and a growing mix of value-added offerings. In the fourth quarter of fiscal 2025, Foodservice net sales increased 4% year over year, while organic net sales rose a stronger 6%, despite reported volume declining 5% and organic volume remaining flat.

Growth was broad-based across several higher-value categories, including customized solutions, branded bacon and pepperoni, premium prepared proteins and the Jennie-O turkey portfolio. These offerings highlight Hormel Foods’ focus on protein-centric, menu-ready solutions that help operators address consistency, preparation efficiency and menu differentiation. During the quarter, the Foodservice segment continued to benefit from its wide portfolio of solutions-based products, supported by a direct-selling model and a diverse channel footprint.

From a profitability lens, Foodservice generated segment profit of $134.4 million in the fiscal fourth quarter, down 12.9% year over year, as elevated commodity-driven input costs and the impact of a chicken-product recall more than offset sales growth. While these factors weighed on near-term margins, they also illustrate the sensitivity of Foodservice earnings to input cost volatility and operational disruptions, even amid solid top-line execution.

Management highlighted the segment’s broad channel exposure, spanning quick-service restaurants, full-service dining, convenience retail and non-commercial customers, which helps balance performance across different demand environments. With Foodservice net sales totaling $3.94 billion in fiscal 2025, or roughly one-third of company revenues, the segment remains an important component of Hormel Foods’ overall earnings mix, particularly as growth is increasingly driven by product mix and branded solutions rather than volume alone.

Hormel Foods’ Zacks Rank & Share Price Performance

Shares of this Zacks Rank #3 (Hold) company have gained 2.9% in the past month compared with the industry and the broader Consumer Staples sector’s growth of 1.9% and 0.1%, respectively. HRL has also outperformed the S&P 500 index’s growth of 1.4% during the same period.

HRL Stock's Past Month Performance

Is Hormel Foods a Value Play Stock?

Hormel Foods currently trades at a forward 12-month P/E ratio of 16.21 compared with the industry average of 12.42. This valuation places the stock at a premium relative to peers, indicating broader market expectations around its business stability and ability to navigate current cost and demand dynamics.

HRL Valuation Picture

How the Zack Consensus Estimate Stacks Up for HRL

The Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past 30 days, the consensus estimate has increased 6 cents to $1.46 for the current fiscal year and 5 cents to $1.58 per share for the next fiscal year.

Top-Ranked Stocks

United Natural Foods, Inc. (UNFI) distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for United Natural’s current fiscal-year sales and earnings implies growth of 1% and 187.3%, respectively, from the year-ago figures. UNFI delivered a trailing four-quarter earnings surprise of 52.1%, on average.

Village Farms International, Inc. (VFF) produces, markets and distributes greenhouse-grown tomatoes, bell peppers, cucumbers and mini-cukes in North America. It sports a Zacks Rank #1 at present. Village Farms delivered a trailing four-quarter earnings surprise of 155.6%, on average.

The Zacks Consensus Estimate for Village Farms’ current fiscal-year earnings indicates growth of 165.6% from the prior-year levels.

The Vita Coco Company, Inc. (COCO) develops, markets and distributes coconut water products under the Vita Coco brand name. COCO currently flaunts a Zacks Rank #1. Vita Coco delivered a trailing four-quarter earnings surprise of 30.4%, on average.

The Zacks Consensus Estimate for Vita Coco's current fiscal-year sales and earnings implies growth of 18% and 15%, respectively, from the year-ago figures.

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This article originally published on Zacks Investment Research (zacks.com).

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