Hormel Stock is Starting to Look Tasty Again Hormel stock is down 2% for the year and HRL stock is currently trading above the 12-month price target of analysts. However, the stock appears to be...

As Hormel Foods (NYSE: HRL) approaches earnings on September 2, it would be fair for shareholders to wonder "where's the beef?" With apologies to Wendy's (NASDAQ: WEN) for appropriating one of their advertising slogans from years back, it serves as a useful jumping-off point for looking at HRL stock.

Prior to the pandemic, Hormel Foods stock was trading at an all-time high. Investors who bought the dip were rewarded. Due to millions of Americans stocking their pantries and preparing more meals at home, HRL stock quickly soared past those levels. However, since August 2020 the stock has been in a downtrend. In fact, HRL stock is down 2% for the year as of the market close on August 30.

And there's more bad news for growth-minded investors. The stock is currently trading above the 12-month price target of analysts. Maybe a bit more concerning is the consensus "Hold" opinion that the analysts have for HRL stock.

However, the stock appears to be rallying ahead of earnings. And I believe that makes it a compelling buy as it prepares to report earnings.

Going Back to School

One of the compelling catalysts for Hormel so far in 2021 is the foodservice business. And that appears to be getting stronger. In the last several weeks, thousands of college students are returning to campus. And one way or another, including vaccine mandates on some campuses, it appears that students may have a more normal experience this year.

That may allow the company to raise its guidance above the $10.2 to 10.8 billion in revenue and $1.70 to $1.82 earnings per share it projected in the last quarter. Analysts will also want to hear how the company is doing on improving its operating margins that it admitted had dropped from 12.1% to 11.1% on a year-over-year basis. And analysts will want to hear that the Planters acquisition is on schedule.

A Rock-Solid Dividend

On Hormel's last earnings call in June, the company stated that it had just paid its dividend for the 371st consecutive quarter. And that means that when they report earnings on September 2, Hormel will have paid a dividend every quarter for 93 years.

I know, I know. But where's the growth? If you had bought the stock five years ago, the stock price has only grown 19%. That's about the average growth of the S&P 500 every year in that time.

That's a fair point. However, But the whole point in investing in a stock like Hormel is that you don't have to get hung up on things like valuation. Despite having one of the highest valuations among consumer staples stocks, it continues to prove to investors it's worth the price investors pay.

Over time, Hormel has proven that it takes care of its shareholders. And as of this writing, HRL stock has a dividend yield of 2.1%, While yield chasers may not be impressed, that's 30 basis points higher than its five-year average.

Is it Time to Nibble on Hormel Stock?

Don't fight the trend comes to mind, and the trend for HRL stock is bearish at the moment. In fact, aside from the dividend, it's hard for shareholders to get excited about the capital growth over the last couple of years. And bearish investors may look at the P/E ratio that is currently around 27 and wish it was a little lower.

Both those statements are true. And if you're investing in Hormel expecting stock price performance that will outpace the performance of the S&P 500, you should probably look elsewhere. But, if you're looking for a company with a strong balance sheet and a reliable dividend that will provide you with steady, predictable income, then now is a good time to take a position on HRL stock.