Hormel Foods Corp (NYSE:HRL).'s stock took a significant hit on Thursday, experiencing an 8.7% drop. This marks the largest percentage decrease since May 18, 2022, and the lowest close for the company since March 23, 2018. As a result, Hormel was the worst performer in the S&P 500 for the day. According to InvestingPro data, the company's stock is trading near its 52-week low, with the price being 74.02% of its 52-week high.
The decline in stock value follows the ratification of a new contract with United Food and Commercial Workers International Union members across multiple states. The newly approved contract includes wage hikes between $3 and $6 per hour, nearly doubles bereavement leave, protects healthcare coverage, and increases retirement benefits.
Despite this downturn in stock performance, Hormel has projected a 5% to 7% operating income growth and a 2% to 3% organic net sales growth by 2026. This projection was announced on the company's investor day. However, InvestingPro Tips indicates that Hormel's revenue has been declining at an accelerating rate, with a 3.44% revenue growth in the last twelve months ending Q3 2023.
Wall Street analysts have set expectations for Hormel's fiscal revenues at $12.192 billion for 2023 and $12.408 billion for 2024. More detailed financial projections are expected to be announced on November 29. The company's adjusted market cap stands at $18.08 billion, and it operates with a moderate level of debt, as per InvestingPro data.
Historically, Hormel has maintained a compound annual revenue growth rate of 4.2% from 2012 to 2022. The recent stock drop and new contract ratification represent significant developments for the company as it navigates its future growth trajectory. Interestingly, despite the challenges, Hormel has maintained dividend payments for 53 consecutive years and has raised its dividend for 31 consecutive years, according to InvestingPro Tips. The company's dividend yield as of 2023 stands at 3.04%, with a growth of 5.77% in the last twelve months ending Q3 2023.
For more insights like these, consider exploring InvestingPro, which offers additional tips and real-time metrics for companies like Hormel.
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