Hormel (HRL) Stock Rising in Pre-Market Trading on 2 for 1 Split

Hormel (HRL) stock is up in pre-market trading after the food products company announced a two for one stock split.
By Amanda Schiavo ,

NEW YORK (TheStreet) -- Shares of Hormel (HRL) - Get Report are gaining by 1.56% to $72.43 in pre-market trading on Wednesday morning, after the food products company announced a two for one stock split.

This marks the tenth stock split in the Austin, Minn.-based company's history.

"This decision acknowledges our track record of providing our shareholders solid long-term returns and demonstrates our confidence that we will continue to grow our sales and earnings in the future. In addition, we anticipate this will also put our stock price in a more attractive trading range for a number of individual investors," Hormel CEO Jeffery M. Ettinger said in a statement announcing the split.

Hormel still needs to gain stockholder approval for the split, which it hopes to receive at its annual meeting to be held on Tuesday, January 26, 2016.

As part of the proposal the number of authorized shares of voting common stock would increase from 800 million to 1.6 billion.

Additionally, Credit Suisse has upped its price target on Hormel stock to $72 from $66 based on the company's upgraded guidance.

Separately, TheStreet Ratings team rates HORMEL FOODS CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

We rate HORMEL FOODS CORP (HRL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • HORMEL FOODS CORP has improved earnings per share by 5.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HORMEL FOODS CORP increased its bottom line by earning $2.23 versus $1.94 in the prior year. This year, the market expects an improvement in earnings ($2.61 versus $2.23).
  • Net operating cash flow has significantly increased by 104.89% to $244.51 million when compared to the same quarter last year. In addition, HORMEL FOODS CORP has also vastly surpassed the industry average cash flow growth rate of -20.72%.
  • HRL's debt-to-equity ratio is very low at 0.15 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.73 is somewhat weak and could be cause for future problems.
  • You can view the full analysis from the report here: HRL

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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