AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat31
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 1/4 · Brands and trademarks provide differentiation, with selected product strength and Foodservice growth. Retail weakness and observed substitution toward cheaper offerings indicate fragile protection; no other structural mechanism is demonstrated.
durability · 1/4 · Legal brand assets persist, but persistent economic protection is weakly supported. Consumer substitution and realized impairments undermine a durable brand-rent thesis; impairments alone do not prove every brand is impaired.
customer dependency · 1/4 · Foodservice pricing benefits with modest volume growth suggest some demand strength, assessed indirectly. Consumer trade-down and Retail organic-volume declines indicate limited dependency; contractual lock-in is not demonstrated.
erosion resilience · 2/4 · Foodservice growth and earlier gross-margin improvement show resilience in parts of the business. Later Retail weakness, lower quarterly gross margin, and substitution toward value offerings make portfolio resilience mixed.
Pricing power44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Second-quarter Foodservice results explicitly benefited from market-based pricing alongside modest volume growth. This demonstrates realized pricing benefits, but does not establish sustained discretionary increases across the portfolio. Retail sales and volume differences cannot isolate price from mix.
retention · 2/4 · Indirect operating evidence is mixed: Foodservice combined pricing benefits with modest volume growth, and selected Retail products performed strongly, while Retail organic volume declined and some consumers shifted toward cheaper offerings. Portfolio exits explain part of broader volume weakness. No retention rate is inferred.
margin resilience · 2/4 · Margins improved across segments in the first half despite input and logistics pressure. Nine-month gross margin remained slightly above the prior year, but third-quarter gross margin declined. Manufacturing improvements and favorable pork costs also contributed, limiting attribution to pricing power.
contractual freedom · 1/4 · Disclosed market-based pricing on certain lines and implementation lead times constrain pricing discretion and cost recovery. Actual Foodservice pricing actions show some flexibility, but customer contract terms do not establish broad unilateral repricing rights.
Predictability88
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 50.00
- Revenue growth volatility (pp)
- 4.76
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 1.30
Financial strength63
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 37.89
- netDebtEbitGrade
- 39.14
- interestCoverageGrade
- 74.62
- currentRatioGrade
- 100.00
- Debt / FCF (x)
- 5.35
- Net debt / operating income (x)
- 3.04
- Interest coverage (x)
- 9.21
- Current ratio (x)
- 2.47
Capital allocation83
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 9.40
- 3-year average dilution (%)
- 0.32
- 3-year average SBC / revenue (%)
- 0.20
- cashConversionGrade
- 100.00
Management44
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Actual operating cash generation, capital spending, divestiture proceeds, and dividends show active capital allocation. Cash-flow improvement partly reflects the prior-year inventory comparison, while impairments and the $61 million turkey divestiture loss weaken evidence of investment effectiveness. These outcomes support a mixed assessment rather than relying on management's stated allocation philosophy.
incentive alignment · 2/4 · Existing ownership and share-retention requirements and incentives incorporating relative TSR, organic sales growth, and ROIC support alignment. Former CEO consulting arrangements include a target-performance floor, weakening downside alignment. Disclosed eligibility is not treated as an actual subsequent grant or payout, and executive ownership compliance remains incompletely covered.
execution · 1/4 · Foodservice pricing and growth and improved turkey manufacturing demonstrate achievements. However, fiscal 2025 impairments and operating-income decline, followed by Retail weakness and third-quarter organic-sales contraction, indicate fragile overall execution. Segment operating results are indirect evidence of management execution and also reflect commodity conditions and portfolio actions.
governance · 2/4 · Independent standing committees, an independent chairman, and an auditor opinion supporting effective internal control provide demonstrated safeguards. The former CEO's incentive floor and a recorded antitrust settlement temper the assessment. The settlement is subject to court approval and is not proof of alleged wrongdoing; effective financial controls do not establish exceptional governance broadly.
Evidence
Patents and Trademarks There are numerous patents and trademarks important to the Company’s business.
Business / Patents and Trademarks · Filed 05/12/2025
Through effective marketing, a dedicated network of direct and indirect sales personnel, and robust quality assurance programs, the Company’s strategy is to provide high quality products that possess strong brand recognition supported by reliable customer service, to support a higher value proposition for customers and consumers.
Business / Competition / issuer brand-value strategy · Filed 05/12/2025
Quarter Ended Nine Months Ended In thousands July 26, 2026 July 27, 2025 % Change July 26, 2026 July 27, 2025 % Change Net Sales Retail $ 1,779,434 $ 1,858,434 (4.3) $ 5,416,905 $ 5,532,401 (2.1) Foodservice 1,003,158 986,976 1.6 2,998,096 2,853,603 5.1 International 178,740 187,466 (4.7) 546,249 534,495 2.2 Total Net Sales $ 2,961,333 $ 3,032,876 (2.4) $ 8,961,250 $ 8,920,499 0.5 Segment Profit Retail $ 118,073 $ 122,566 (3.7) $ 369,902 $ 378,847 (2.4) Foodservice 144,475 140,711 2.7 456,800 420,170 8.7 International (29,233) 18,941 (254.3) 15,812 58,193 (72.8) Total Segment Profit 233,316 282,218 (17.3) 842,515 857,210 (1.7) Net Unallocated Expense 130,104 45,658 185.0 298,802 171,769 74.0 Noncontrolling Interest (55) (46) (20.4) (182) (366) 50.2 Earnings Before Income Taxes $ 103,157 $ 236,514 (56.4) $ 543,531 $ 685,076 (20.7) Retail Quarter Ended Nine Months Ended In thousands July 26, 2026 July 27, 2025 % Change July 26, 2026 July 27, 2025 % Change Volume (lbs.) 648,340 712,912 (9.1) 2,005,233 2,127,075 (5.7) Organic Volume (lbs.) 648,340 709,372 (8.6) 2,005,233 2,118,469 (5.3) Net Sales $ 1,779,434 $ 1,858,434 (4.3) $ 5,416,905 $ 5,532,401 (2.1) Organic Net Sales 1,779,434 1,839,382 (3.3) 5,416,905 5,486,876 (1.3) Segment Profit 118,073 122,566 (3.7) 369,902 378,847 (2.4) Organic net sales decreased in the third quarter of fiscal 2026, as declines in commodity turkey and private label snack nuts were partially offset by strong performance in value-added turkey offerings, contract manufacturing, and Planters® snack nuts.
MD&A / Segment Results / segment sales, profits, and Retail operating results · Filed 27/08/2026
◦The increase in Foodservice segment profit was driven primarily by net sales performance, which benefited from market-based pricing actions and modest volume growth.
MD&A / second-quarter Foodservice pricing and volume results · Filed 28/05/2026
For certain products and product categories there has been, and the Company expects there to continue to be, a consumer shift towards more generic, lower-priced, or other value offerings, including private label products, which could result in lower sales, reduced margins, and lower market share for the Company's products.
Risk Factors / observed consumer shift toward lower-priced offerings · Filed 05/12/2025
Market-based pricing on certain product lines, and lead time required to implement pricing adjustments, may prevent all or part of these cost increases from being recovered, and these higher costs could adversely affect the Company’s short-term financial results.
Risk Factors / market-based pricing and cost-recovery limitations · Filed 05/12/2025
For the first nine months of fiscal 2026, volume declined in all three segments, driven primarily by the commodity turkey portfolio and the strategic exit from select non-core private label snack nut items.
MD&A / nine-month volume declines and portfolio-exit drivers · Filed 27/08/2026
Organic net sales decreased 2 percent with growth from the Foodservice segment offset by declines in the Retail and International segments.
MD&A / third-quarter organic sales by segment · Filed 27/08/2026
26 Table of Contents Gross Profit Quarter Ended Nine Months Ended In thousands July 26, 2026 July 27, 2025 % Change July 26, 2026 July 27, 2025 % Change Gross Profit $ 471,515 $ 487,309 (3.2) $ 1,459,597 $ 1,446,975 0.9 Percent of Net Sales 15.9 % 16.1 % 16.3 % 16.2 % For the third quarter of fiscal 2026, gross profit as a percent of net sales decreased.
MD&A / quarterly and nine-month gross profit results · Filed 27/08/2026
Gross profit as a percent of net sales increased for the Retail, Foodservice, and International segments compared to the prior year.
MD&A / second-quarter and six-month segment gross-margin improvement · Filed 28/05/2026
Cost of products sold increased for the first nine months of fiscal 2026, as lower volume, higher beef input costs, and higher logistics expenses were partially offset by favorable pork input costs.
MD&A / nine-month cost drivers · Filed 27/08/2026
Operating income decreased 33 percent compared to the prior year, as earnings were significantly impacted by non-cash impairment charges recorded in the International and Retail segments.
Fiscal 2025 performance / operating-income decline and impairment charges · Filed 17/12/2025
•Earnings before income taxes for the second quarter of fiscal 2026 decreased 11 percent, which was negatively impacted by the $61 million loss on the sale of the whole-bird turkey business.
MD&A / whole-bird turkey divestiture loss · Filed 28/05/2026
Cash flow from operations was $528 million for the first six months of fiscal 2026, a 44 percent increase primarily due to the impact of an inventory build in the second quarter of fiscal 2025.
MD&A / six-month operating cash flow and comparison driver · Filed 28/05/2026
Cash Provided by (Used in) Investing Activities •Capital expenditures were $219 million and $219 million during the first nine months of fiscal 2026 and fiscal 2025, respectively.
Liquidity / actual nine-month capital expenditures · Filed 27/08/2026
•Proceeds from the sale of business were $97 million during the first nine months of fiscal 2026 resulting from the sale of the Company’s controlling equity interest in Justin's, LLC and whole-bird turkey business.
Liquidity / actual divestiture proceeds · Filed 27/08/2026
Cash Provided by (Used in) Financing Activities •Cash dividends paid to the Company’s shareholders totaled $481 million during the first nine months of fiscal 2026, compared to $474 million in the comparable period of fiscal 2025.
Liquidity / actual dividend payments · Filed 27/08/2026
Officers are required to hold shares of our common stock with a value equal to their five-year average base salary times a multiple of 1.5 to 5, depending on their position.
Stock Ownership Guidelines / officer holding requirements · Filed 17/12/2025
Our officers and directors must hold all shares of our common stock acquired (net of shares withheld or sold to fund an option exercise or satisfy withholding taxes) until their stock ownership guidelines have been met.
Stock Ownership Guidelines / retention of acquired shares · Filed 17/12/2025
◦The long-term incentive program includes multiple components: stock options and RSUs that vest over time, encouraging retention, and a cash-based plan focused on relative TSR, Organic Net Sales Growth and ROIC.
Compensation risk assessment / existing long-term incentive components · Filed 17/12/2025
Snee is entitled to: (1) receive monthly fees totaling an aggregate of $2.0 million; (2) participate under the Company’s AIP for Fiscal 2026 and Fiscal 2027, in each case with a target award opportunity of $1.85 million pro-rated for the length of Mr.
Departure arrangements / former CEO consulting fees and incentive eligibility · Filed 17/12/2025
Snee’s service during such fiscal year and based on the greater of actual performance for the full fiscal year and target performance for the full fiscal year; and (3) be eligible to receive an equity award for Fiscal 2026 consisting of non-qualified stock options with a grant date fair value of $1.5 million and RSUs with a grant date fair value of $1.5 million.
Departure arrangements / incentive performance floor and equity eligibility · Filed 17/12/2025
The Board also has determined that each of the Company’s Audit, Compensation, and Governance Committees is composed solely of independent directors.
Board Independence / independent committee composition · Filed 17/12/2025
The only changes to director compensation in Fiscal 2025 related to director service on the Board's CEO Search Committee and Transition Strategy and Support Committee, both of which were formed and dissolved during Fiscal 2025, and the appointment of an independent Chairman of the Board.
Director Compensation / appointment of independent chairman · Filed 17/12/2025
In our opinion, Hormel Foods Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of October 26, 2025, based on the COSO criteria.
Independent auditor report / effective internal control as of October 26, 2025 · Filed 05/12/2025
Although the Company strongly denies liability, continues to deny the allegations asserted, and believes it has valid defenses, to avoid the uncertainty, risk, expense, and distraction of continued litigation, the Company executed a settlement agreement providing for payment by the Company to the class of direct purchaser plaintiffs in the total settlement amount of $37.5 million, subject to court approval, which was recorded as Accrued Expenses and in Selling, General, and Administrative in the third quarter of fiscal 2026.
Commitments and Contingencies / recorded turkey antitrust settlement subject to court approval · Filed 27/08/2026
The Company faces competition from a variety of sources, including other national brands, private label producers, and producers of alternative meats and protein sources, including pork, beef, turkey, chicken, fish, nuts, nut butters, whey, and plant-based proteins.
Risk Factors / generic competitive categories · Filed 05/12/2025
Segment profit also benefited from improved performance across the turkey manufacturing network.
MD&A / improved turkey manufacturing performance · Filed 28/05/2026
