Value
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.4 |
| P/S | 9.6 |
| EV/EBITDA | 5.4 |
| Fwd P/E | 7.7 |
| PEG | 4.8 |
| Analyst target | 4.0 |
- ▸Forward P/E: 16.0x
- ▸PEG: 1.74
HRL · Why this verdict
Why Hormel Foods (HRL) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.2/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
RSI at 86 signals overbought conditions, and the stock is trading above its near-term resistance level with the moving-average slope flat to negative; the rising on-balance volume and improving MACD may reflect a recovery attempt, but the combination of overbought readings and a flat trend slope is consistent with late-cycle distribution risk rather than a sustained breakout. Momentum breakdown | RSI normalizes below 65 while price holds above $23.20 (within the canonical downside range from current levels) for 4 consecutive weeks, confirming the overbought condition resolved through time rather than a price decline. | →Stable |
| CounterOverbought RSI readings in recovering names can persist for extended periods if incremental buyers step in on each small pullback; the rising on-balance volume suggests demand may be genuine enough to sustain elevated levels longer than the RSI reading implies. | ||
Revenue is declining at 3% year-over-year, indicating the company is losing volume, mix, or pricing power in its core categories; sustained top-line contraction limits operating leverage and compresses the pathway to meaningful earnings growth. Growth breakdown | Revenue growth turns positive (greater than 0% year-over-year) for 2 consecutive reported quarters, signaling the contraction trend has reversed. | →Stable |
| CounterA 3% revenue decline could reflect deliberate portfolio pruning or pricing adjustments that improve margin quality over time; top-line contraction is not always a sign of market-share loss if the pruned volume was low-margin. | ||
The business scores below the minimum quality threshold with no identifiable competitive moat, indicating it lacks the durable characteristics — pricing power, superior returns, financial resilience — typically required to support a long position through a full consumer cycle. Quality breakdown | Quality assessment improves above the minimum investment threshold within the next two fiscal years, driven by consistent margin expansion and improved return metrics that demonstrate a sustainable competitive position. | →Stable |
| CounterPackaged-food companies with broad distribution networks and established brand portfolios can sustain cash flows even without a traditional moat rating; the quality assessment may underweight the durable nature of the company's distribution relationships and shelf-space incumbency. | ||
Three consecutive quarterly earnings beats — with the most recent quarter coming in 12.87% above consensus — following an older miss indicate that management has improved its guidance calibration and execution over the past three reporting periods. Earnings | The beat streak extends through the next reported quarter, with an earnings surprise of at least 3% above consensus, confirming the recent improvement is not a one-quarter anomaly. | →Stable |
| CounterThree beats following a significant prior miss may reflect conservative guidance reset rather than structural improvement; if the beats narrow or reverse, the setup quickly shifts from improving to deteriorating execution and the recent streak loses its informational value. | ||
RSI at 86 signals overbought conditions, and the stock is trading above its near-term resistance level with the moving-average slope flat to negative; the rising on-balance volume and improving MACD may reflect a recovery attempt, but the combination of overbought readings and a flat trend slope is consistent with late-cycle distribution risk rather than a sustained breakout.
→StableMomentum breakdown
- Expectation
- RSI normalizes below 65 while price holds above $23.20 (within the canonical downside range from current levels) for 4 consecutive weeks, confirming the overbought condition resolved through time rather than a price decline.
CounterOverbought RSI readings in recovering names can persist for extended periods if incremental buyers step in on each small pullback; the rising on-balance volume suggests demand may be genuine enough to sustain elevated levels longer than the RSI reading implies.
Revenue is declining at 3% year-over-year, indicating the company is losing volume, mix, or pricing power in its core categories; sustained top-line contraction limits operating leverage and compresses the pathway to meaningful earnings growth.
→StableGrowth breakdown
- Expectation
- Revenue growth turns positive (greater than 0% year-over-year) for 2 consecutive reported quarters, signaling the contraction trend has reversed.
CounterA 3% revenue decline could reflect deliberate portfolio pruning or pricing adjustments that improve margin quality over time; top-line contraction is not always a sign of market-share loss if the pruned volume was low-margin.
The business scores below the minimum quality threshold with no identifiable competitive moat, indicating it lacks the durable characteristics — pricing power, superior returns, financial resilience — typically required to support a long position through a full consumer cycle.
→StableQuality breakdown
- Expectation
- Quality assessment improves above the minimum investment threshold within the next two fiscal years, driven by consistent margin expansion and improved return metrics that demonstrate a sustainable competitive position.
CounterPackaged-food companies with broad distribution networks and established brand portfolios can sustain cash flows even without a traditional moat rating; the quality assessment may underweight the durable nature of the company's distribution relationships and shelf-space incumbency.
Three consecutive quarterly earnings beats — with the most recent quarter coming in 12.87% above consensus — following an older miss indicate that management has improved its guidance calibration and execution over the past three reporting periods.
→StableEarnings
- Expectation
- The beat streak extends through the next reported quarter, with an earnings surprise of at least 3% above consensus, confirming the recent improvement is not a one-quarter anomaly.
CounterThree beats following a significant prior miss may reflect conservative guidance reset rather than structural improvement; if the beats narrow or reverse, the setup quickly shifts from improving to deteriorating execution and the recent streak loses its informational value.
TrendMatrix Research · core thesis
Engine thesis — one sentence
A packaged-foods company with declining revenue, a quality profile below the minimum investment threshold, and the stock trading in overbought territory (RSI 86) above its near-term technical ceiling — with an unfavorable risk/reward — presents a setup that argues for exiting or avoiding the position, despite a recent three-quarter earnings beat streak.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.9 |
| ROA | 3.1 |
| Gross margin | 0.0 |
| Op margin | 4.4 |
| Net margin | 1.9 |
| Current ratio | 6.8 |
| FCF quality | 7.0 |
| Moat | 3.1 |
| Piotroski F | 4.4 |
- ▸No competitive moat
Growth
1.4/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.8 |
| EPS growth | 1.0 |
- ▸Declining revenue: -3%
Momentum
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.8 |
| OBV | 1.0 |
| MA position | 5.0 |
| Volume | 4.6 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.5 |
| Analyst rating | 5.0 |
| Price target | 6.5 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
2.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.6 |
| quality rank | 3.9 |
| growth rank | 1.3 |
Technical
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.4 |
| support resistance | 7.1 |
| 52w position | 6.0 |
Risk (lower is worse)
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.4 |
| days to cover | 7.6 |
| volatility | 5.6 |
| put call | 10.0 |
| implied vol | 3.6 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 0.8 |
| news risk | 6.0 |
- ▸Above max pain $11
Catalyst
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.8 |
| dividend safety | 5.2 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 468.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (5)
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:53d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:3.4<4.5
- ASYMMETRY:-0.8=NEGATIVE
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
-0.75
Upside
-4.1%
Downside
5.5%
Sizing output
AVOID
SetupRange Bound — RSI 46 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Technical at 6.5 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:3.4<4.5.
The strongest dimensions are Technical at 6.5, Value at 5.9, and Sentiment at 5.9; the weakest are Growth at 1.4, Peer rank at 2.5, and Momentum at 3.4. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of -0.75 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Overbought Price Above Resistance
Trip ifRSI falls below 65 while price holds above $23.20 for 4 consecutive weeks, confirming overbought resolution without a technical breakdown.
- P2Quality Below Investment Threshold
Trip ifQuality score rises above 5.0 out of 10 for 2 consecutive assessment periods, reflecting broad-based improvement in margins and financial health.
- P3Revenue Contraction Headwind
Trip ifRevenue growth turns positive (greater than 0% YoY) for 2 consecutive reported quarters.
- P4Recent Earnings Beat Improvement
Trip ifEPS surprise falls below 0% for 2 consecutive reported quarters.