Financial Analysis: Hormel Foods (NYSE:HRL) vs. Vital Farms (NASDAQ:VITL)

Hormel Foods (NYSE:HRL) and Vital Farms (NASDAQ:VITL) are both consumer staples companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, analyst recommendations, valuation, risk and dividends.

Risk and Volatility

Hormel Foods has a beta of 0.27, suggesting that its stock price is 73% less volatile than the S&P 500. Comparatively, Vital Farms has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500.

Valuation and Earnings

This table compares Hormel Foods and Vital Farms”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hormel Foods	$12.15 billion	0.99	$478.20 million	$0.63	34.84
Vital Farms	$748.90 million	0.55	$66.28 million	($0.55)	-17.31

Hormel Foods has higher revenue and earnings than Vital Farms. Vital Farms is trading at a lower price-to-earnings ratio than Hormel Foods, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Hormel Foods and Vital Farms’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hormel Foods	2.82%	9.91%	5.89%
Vital Farms	-3.03%	-3.74%	-2.24%

Institutional & Insider Ownership

41.0% of Hormel Foods shares are held by institutional investors. Comparatively, 98.6% of Vital Farms shares are held by institutional investors. 0.6% of Hormel Foods shares are held by insiders. Comparatively, 3.9% of Vital Farms shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Hormel Foods and Vital Farms, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hormel Foods	1	6	1	0	2.00
Vital Farms	1	7	6	0	2.36

Hormel Foods presently has a consensus price target of $25.43, suggesting a potential upside of 15.86%. Vital Farms has a consensus price target of $16.45, suggesting a potential upside of 72.84%. Given Vital Farms’ stronger consensus rating and higher probable upside, analysts clearly believe Vital Farms is more favorable than Hormel Foods.

Summary

Hormel Foods beats Vital Farms on 8 of the 14 factors compared between the two stocks.

About Hormel Foods

Hormel Foods Corporation develops, processes, and distributes various meat, nuts, and other food products to retail, foodservice, deli, and commercial customers in the United States and internationally. It operates through three segments: Retail, Foodservice, and International segments. The company provides various perishable products that include fresh meats, frozen items, refrigerated meal solutions, sausages, hams, guacamoles, and bacons; and shelf-stable products comprising canned luncheon meats, nut butters, snack nuts, chili, shelf-stable microwaveable meals, hash, stews, tortillas, salsas, tortilla chips, nutritional food supplements, and others. It sells its products under the HORMEL, ALWAYS TENDER, APPLEGATE, AUSTIN BLUES, BACON 1, BLACK LABEL, BREAD READY, BURKE, CAFÉ H, CERATTI, CHI-CHI'S, COLUMBUS, COMPLEATS, CORN NUTS, CURE 81, DAN'S PRIZE, DI LUSSO, DINTY MOORE, DON MIGUEL, DOÑA MARIA, EMBASA, FAST N EASY, FIRE BRAISED, FONTANINI, HAPPY LITTLE PLANTS, HERDEZ, HORMEL GATHERINGS, HORMEL SQUARE TABLE, HORMEL VITAL CUISINE, HOUSE OF TSANG, JENNIE-O, JUSTIN'S, LA VICTORIA, LAYOUT, LLOYD'S, MARY KITCHEN, MR. PEANUT, NATURAL CHOICE, NUT-RITION, OLD SMOKEHOUSE, OVEN READY, PILLOW PACK, PLANTERS, ROSA GRANDE, SADLER'S SMOKEHOUSE, SKIPPY, SPAM, SPECIAL RECIPE, THICK & EASY, VALLEY FRESH, AND WHOLLY brands through sales personnel, independent brokers, and distributors. The company was formerly known as Geo. A. Hormel & Company and changed its name to Hormel Foods Corporation in January 1995. Hormel Foods Corporation was founded in 1891 and is headquartered in Austin, Minnesota.

About Vital Farms

Vital Farms, Inc., a food company, provides pasture-raised products in the United States. It offers shell eggs, butter, hard-boiled eggs, and liquid whole eggs. The company was founded in 2007 and is headquartered in Austin, Texas.