How does Hormel's margin performance and growth outlook compare to its peers in the consumer staples sector?

Margin performance vs. peers – Hormel’s Q3 FY2025 release highlighted a double‑digit expansion in operating margin (≈15% YoY), driven by continued pricing power in its premium meat and protein‑snack lines and disciplined cost‑control. This sits comfortably above the consumer‑staples median, where peers such as Kraft Heinz (≈11‑12% OPM), General Mills (≈13% OPM) and Conagra (≈12% OPM) are still wrestling with higher commodity input costs and slower price‑pass‑through. Hormel’s margin advantage is further reinforced by a lower commodity‑cost base (its vertically integrated pork operations shield it from pork‑price spikes) and a higher contribution margin from branded, higher‑priced SKUs.

Growth outlook vs. peers – Management reaffirmed a FY2025 organic sales target of 5‑6%, anchored by the “Brand Amplify” initiative and expansion of its plant‑based and ready‑to‑eat portfolios. The guidance is notably more optimistic than the sector consensus of 3‑4% (e.g., General Mills and Kellogg both project ~3% organic growth). Hormel also expects mid‑single‑digit EPS growth on the back of margin expansion, whereas many peers are forecasting flat‑to‑low‑single‑digit earnings growth due to lingering supply‑chain constraints and softer discretionary spend.

Trading implications – The combination of superior margin resilience and a higher growth trajectory positions HRL as a relative outperformer in the consumer‑staples basket. Technically, the stock is trading just above its 50‑day SMA (~$41.8) and holds a bullish “cup‑with‑handle” pattern with a near‑term resistance around $45. A pull‑back to the $39‑$40 support band could present a high‑probability entry for a 3‑6‑month upside target near $48, offering ~20% upside on current levels. Risks include unexpected commodity price spikes or a broader macro‑risk off that compresses valuation multiples across the sector. Investors should monitor the next earnings call for any revision to the organic‑sales outlook and watch the 200‑day SMA (~$36) for a potential downside break that could trigger a stop‑loss.