AI Takeaway
Hormel Foods (HRL) delivered solid Q1 FY2026 results with net income rising 6.6% YoY to $181.8M, driven by a significant 8.1% reduction in SG&A expenses and strong operating cash flow growth of 12.9%, despite a modest 1.2% decline in gross profit.
Cost of Revenue
$2.56B
++1.76% YoY
EPS (Basic)
$0.33
++6.45% YoY
Operating Income
$243.7M
++6.73% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Operating income grew 6.7% YoY to $243.7M, primarily supported by an $21.3M reduction in SG&A expenses (down 8.1% to $241.7M), demonstrating management's focus on operational efficiency even as gross profit declined slightly.
Source: Source: 10-Q Income Statement Data
Gross profit declined 1.2% YoY to $469.6M as cost of revenue increased 1.8% YoY to $2.56B, suggesting input cost pressures or product mix shifts that compressed the gross margin from approximately 15.9% to 15.5%.
Source: Source: 10-Q Income Statement Data
Operating cash flow surged 12.9% YoY to $349.2M, well above net income of $181.8M, reflecting healthy non-cash add-backs including $67.1M in D&A and favorable working capital dynamics.
Source: Source: 10-Q Cash Flow Statement Data
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Upgrade to unlockCost of revenue rose 1.8% YoY to $2.56B while net sales grew at a slower pace, compressing gross profit by 1.2% to $469.6M. Sustained commodity or raw material cost inflation could further pressure margins if pricing power is limited.
Source: Source: 10-Q Income Statement Data
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Upgrade to unlockReported EPS of $0.34 versus the $0.32 analyst consensus — a +4.8% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Cost of Revenue | $2.56B | $2.51B | +1.76% |
Gross Profit | $469.57M | $475.23M | -1.19% |
Operating Income | $243.7M | $228.33M | +6.73% |
Net Income | $181.8M | $170.57M | +6.58% |
EPS (Basic) | $0.33 | $0.31 | +6.45% |
EPS (Diluted) | $0.33 | $0.31 | +6.45% |
SG&A Expense | $241.7M | $263.01M | -8.10% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $13.32B | $13.4B | -0.65% |
Current Assets | $3.39B | $3.27B | +3.74% |
Current Liabilities | $1.27B | $1.33B | -4.42% |
Stockholders' Equity | $7.94B | $8.03B | -1.12% |
Cash & Equivalents | $867.91M | $840.4M | +3.27% |
Long-Term Debt | $2.85B | $2.85B | +0.03% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $349.21M | $309.21M | +12.94% |
Investing Cash Flow | $7.95M | $-60.33M | +113.17% |
Financing Cash Flow | $-162.43M | $-143.06M | -13.54% |
D&A | $67.09M | $65.87M | +1.86% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
ROE | 2.3% | — | — |
ROA | 1.4% | — | — |
Current Ratio | $2.662 | — | — |
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Hormel Foods posted solid Q1 FY2026 results with net income rising 6.6% YoY to $181.8M and diluted EPS of $0.33, up from $0.31 a year ago. The improvement was largely driven by an 8.1% reduction in SG&A expenses to $241.7M, which offset a slight 1.2% decline in gross profit.
The key takeaways from HRL's Q1 FY2026 report are strong cost discipline (SG&A down 8.1%), operating income growth of 6.7% to $243.7M, and robust operating cash flow of $349.2M (up 12.9% YoY). However, gross profit declined slightly due to rising cost of revenue, highlighting ongoing input cost pressures.
Based on the financial data, key risks include gross margin compression from rising input costs (cost of revenue up 1.8% YoY), a substantial long-term debt load of $2.85B, and potential over-reliance on SG&A cuts rather than organic revenue growth to drive earnings improvement.
Hormel's financial health appears solid: the current ratio is a healthy 2.66x, cash & equivalents stand at $867.9M (up 3.3% YoY), and long-term debt of $2.85B is conservative relative to stockholders' equity of $7.94B (implying ~0.36x debt-to-equity). Operating cash flow of $349.2M provides strong coverage of financial obligations.
Implied total revenue for Q1 FY2026 is approximately $3.03B (gross profit of $469.6M plus cost of revenue of $2.56B), though the exact reported net sales figure was not separately disclosed in the available data. Cost of revenue grew 1.8% YoY, suggesting modest volume or pricing activity, while gross profit declined 1.2%, indicating input costs grew faster than sales.