JPMorgan updates its valuation model for Hormel Foods (HRL), upgrading its outlook as revised projections show stronger-than-expected margin performance and volume resilience. The move reflects a shift in institutional sentiment toward the packaged meats and consumer staples sector.
- JPMorgan upgrades Hormel Foods (HRL) outlook to 'Neutral' after model refresh
- Projected EBITDA margin expansion to 18.7% by 2026, up from 17.1%
- Q3 2025 adjusted EPS of $0.73, surpassing estimates by $0.04
- Full-year 2025 EPS forecast raised to $2.85 from $2.71
- International export volumes up 9.4% YoY in Q3 2025
- HRL shares trading at 12.3x forward P/E, below 5-year average of 15.1x
JPMorgan has revised its investment outlook on Hormel Foods Corporation (HRL), now assigning a 'Neutral' rating based on an updated financial model incorporating revised assumptions around pricing power and supply chain efficiency. The firm’s updated analysis, reflecting data through Q3 2025, highlights a projected EBITDA margin expansion to 18.7% by 2026, up from 17.1% in the prior estimate. This improvement stems from optimized cost controls and sustained premium pricing in its branded meat lines, particularly in the SPAM and Hormel Black Label segments. The reassessment follows a 4.2% year-over-year increase in HRL’s adjusted earnings per share (EPS) for the third quarter, reaching $0.73, exceeding expectations by $0.04. JPMorgan attributes the outperformance to disciplined inventory management and higher-than-anticipated demand in the U.S. retail channel, especially in value-oriented grocery formats. The firm now forecasts full-year 2025 EPS of $2.85, up from $2.71 previously. The change in outlook may prompt portfolio rebalancing among institutional investors tracking consumer staples. HRL shares, currently trading at a 12.3x forward P/E, remain below their five-year average of 15.1x, suggesting potential upside for value-oriented funds. The stock has gained 5.7% over the past two weeks, aligning with broader sector momentum in food and beverage stocks. Market participants are also monitoring Hormel’s international growth, particularly in Asia, where export volumes rose 9.4% year-over-year in Q3. JPMorgan notes that regional diversification is now a key driver of earnings stability, reducing dependence on domestic U.S. demand.