tapebrief
HRL · Q1 2026

HRL · Q2 2026 Earnings

Cautious

Hormel Foods

Reported May 28, 2026

30-second summary

Hormel printed Q2 FY2026 revenue of $2.97B (+2.5% YoY, +0.3% above the $2.96B consensus) and adjusted EPS of $0.40 — a 14.3% beat vs. $0.35 consensus and a 6-cent step-up off Q1's $0.34. Organic net sales grew 3.3%, the sixth consecutive quarter of organic growth, and adjusted operating margin reached 9.9%. Yet management reaffirmed every adjusted FY2026 metric ($12.2–$12.5B revenue, $1.43–$1.51 adj. EPS, $1.06–$1.12B adj. operating income), narrowed the GAAP EPS range modestly downward to $1.28–$1.37, and introduced a new qualitative Q3 framing — adj. EPS "more in line with prior year" — citing commodity and logistics cost pressures. The H1 beat is real; the refusal to translate it into a raised FY range is the more important signal.

Headline numbers

EPS

Q2 FY2026

$0.40

-14.3% vs est.

Revenue

Q2 FY2026

$2.97B

+2.5% YoY

+0.3% vs est.

Gross margin

Q2 FY2026

17.4%

Free cash flow

Q2 FY2026

$0.10B

Operating margin

Q2 FY2026

7.3%

Key financials

Q2 FY2026
MetricQ2 FY2026Q2 FY2025YoYQ1 FY2026QoQ
Revenue$2.97B$2.90B+2.4%$3.03B-1.9%
EPS$0.40$0.35+14.3%$0.34+17.6%
Gross margin17.4%16.7%+70bps15.5%+190bps
Operating margin7.3%8.6%-130bps8.0%-70bps
Free cash flow$0.10B——$0.28B-65.4%

Guidance

Company reaffirms full-year FY2026 guidance across revenue, organic growth, and adjusted EPS despite strong H1 beats, while signaling Q3 earnings pressure from commodity and logistics costs.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ2 FY2026—$2.97B+0.3% above estimateBeat
Adjusted diluted EPSQ2 FY2026—$0.40+14.3% above estimateBeat

New guidance

MetricPeriodGuideYoY
Adjusted EPSQ3 FY2026More in line with prior yearFlat to +1% YoY

Changes to prior guidance

MetricPeriodPrior guideNew guideΔResult
Diluted EPS (GAAP)
FY2026
$1.29 to $1.39$1.28 to $1.37-$0.01 to -$0.02 at both endsLowered

Reaffirmed unchanged this quarter: Adjusted operating income ($1.06 billion to $1.12 billion (4% to 10% growth)), Organic net sales growth (1% to 4%), Adjusted diluted EPS ($1.43 to $1.51), Net sales ($12.2 billion to $12.5 billion)

Segment performance

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Retail$1.79B$1.78B+0.6%
Foodservice$0.997B$0.94B+6.1%
International$0.186B$0.18B+3.3%
Retail Segment Profit Growth13.5%——
Foodservice Segment Profit Growth10.8%——
International Segment Profit Growth20.3%——
Foodservice Consecutive Quarters of Organic Growth11——

Platform metrics

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Organic Net Sales Growth3.3%1.4%—
Consecutive Quarters of Organic Growth6——

Profitability

Q2 FY2026
SegmentQ2 FY2026Q2 FY2025YoY
Adjusted Operating Margin9.9%——
Operating Cash Flow$179 million——

Management tone

Q3 FY2025 ("FY guide withdrawn, 2026 targets disowned") → Q4 FY2025 ("candid miss, structural reset") → Q1 FY2026 ("flat to slightly up Q2 framing, logistics emerging") → Q2 FY2026 (H1 beat, Q3 reset, FY unchanged).

The H1 narrative has flipped from "transition year" to "trending upper half" — but management deliberately did not act on it. Three quarters ago Hormel withdrew the FY range entirely; two quarters ago they reset and guided down; last quarter they framed Q2 as flat-to-slightly-up. This quarter: "we believe we are trending toward the upper half of our earnings range. However, we think that maintaining our current outlook is the right approach at this stage of the year." The disciplined refusal to raise after beating consensus EPS by 14% is the dominant tone signal — management has learned from withdrawing the FY2025 range mid-year and is now pre-funding the H2 risk before it materializes.

Q3 was set up as a one-quarter pressure point, not a thesis break. Management's framing: "While this affects quarterly cadence, it does not change the strength of the underlying business and is fully reflected in our full year outlook." The explicit decoupling of Q3 quarterly softness from FY confidence is a tone choice — they are pre-managing a print rather than warning of structural deterioration. The qualitative Q3 reset ("in line with prior year") sits alongside an unchanged FY range, which mathematically loads Q4 with the upside.

Logistics moved from "too early to tell" (Q1) to "fuel prices adding incremental pressure" (Q2). Last quarter management said logistics could be seasonal or persistent; this quarter they confirmed fuel costs added "incremental pressure during the quarter" and projected logistics to continue pressuring results on a YoY basis through Q3. The "fuel costs persisting through H2" framing is the cleanest answer to the prior watch item: not seasonal.

Retail framing introduced "structural pressure" as a new category. Q1 framed retail issues as private-label exits and pricing-cost lag — known and quantified. Q2: "In some cases, this reflects near-term timing-related dynamics… In other areas, we are seeing more structural pressure, requiring targeted actions to reposition those businesses." This is a new tier of disclosure — segments that need repositioning beyond pricing or mix. Q&A confirmed Planters and Skippy as the underperformers requiring this work; this is the first explicit acknowledgment that select retail brands need structural intervention.

Consumer reframing toward affordability and functionality is now overt. "Consumers and operators are prioritizing products that deliver clear value… we are focused on helping consumers and operators make protein work better for them." The shift from premiumization to functionality-as-value is the most candid consumer acknowledgment in the coverage period — and consistent with Q4 FY2025's "still strained" consumer language carried forward without dilution.

Recurring themes management leaned on this quarter:

Protein-centric portfolio positioning as competitive advantageMargin expansion through pricing discipline and mixSupply chain operational excellence and efficiencySix consecutive quarters of organic net sales growthTechnology modernization and digital capabilities enhancementNear-term cost pressure offset by full-year confidence

Risks management surfaced:

Pork and beef commodity market volatility in second halfFuel prices and logistics cost headwinds persistingStructural pressure in certain retail portfolio segments requiring repositioningInventory rebalancing creating near-term plant utilization pressure in Q3Consumer sentiment remaining low despite food resilience

Q&A highlights

Leah Jordan · Goldman Sachs

Given strong QQ results but investor concerns around input cost inflation and freight, why reaffirm guidance and what explains increased confidence in the outlook?

Management reaffirmed guidance citing six straight quarters of top line growth, protein-centric portfolio strength, and solid business management. Acknowledged Q3 challenges including full quarter of higher fuel expenses, commodity costs above plan, and inventory rebalancing, but emphasized these don't change view of underlying business strength and expect bottom line growth primarily in Q4.

Six straight quarters of top line growth expected to continueTrending to upper half of guidance rangeQ3 expected closer to year-ago levelsFull quarter of higher fuel expenses in Q3

Rupesh Parikh · Oppenheimer

How should investors think about gross margin outlook for Q3 and balance of year given better-than-expected Q2 performance but noted Q3 headwinds?

Management detailed gross margin drivers: retail benefited from second wave of pricing (90-day lag), positive mix benefits from priority brands, and strong turkey manufacturing performance. Q3 margins expected to decline sequentially due to elevated freight and commodity costs plus inventory rebalancing, but still improved versus prior trends. Emphasized continued work needed on underperforming retail brands.

Retail consumption growth +1% dollar basis in Q2Priority brands drove +3% dollar consumption growthSecond retail pricing wave had 90-day lag into Q2Turkey manufacturing benefits from weather and volume

Heather Jones · Heather Jones Research

What manufacturing changes were made to the turkey network beyond volume/weather benefits, and should we expect continued benefits? Also, did broad-based profitability improvements occur across non-turkey retail businesses?

Management attributed turkey manufacturing benefits to weather, volume throughput improvements, and favorable feed conversion/waste factors. Confirmed broad-based retail profitability gains beyond turkey from prior pricing actions on beef/pork/nut commodities and mix benefits from growth in priority brands. Noted manufacturing benefits can be cyclical and weather-dependent.

Volume improvements drove plant throughput benefitsFavorable weather improved feed conversion and waste metricsManufacturing benefits can be cyclicalPricing benefits from commodity spikes (beef, pork, nuts) flowing through

Peter Galba · Bank of America

Bridge the Q2 upside vs. expectations: quantify manufacturing benefits and logistics tailwinds impact. Also, quantify inventory rebalancing impact to Q3 profit and discuss pork belly dynamics.

Management described Q2 upside as driven by strong execution across pricing (second wave of retail pricing), favorable mix (food service growth, priority brand growth in retail), and strong turkey manufacturing. Logistics were less of a headwind than anticipated. Inventory rebalancing is targeted to ambient/center-store products with short-term Q3 impact but not wide-scale. Pork bellies currently lower but wide range of forecast uncertainty; embedded guidance assumes closer to prior year levels for second half.

Strong top line across all three segmentsSecond wave of retail pricing key contributorFood service growth provides favorable mix at company levelTurkey manufacturing strong quarter overall

Michael Avery · Piper Sandler

Food service traffic is down broadly but volumes up—how much is channel mix/share gains vs. other drivers? What's driving resilience despite traffic softness?

Management attributed 7% sales growth with volume growth despite soft traffic to direct sales team collaboration with operator partners (kitchen shortcuts, labor savings, menu affordability), innovation (Calabrian pizza toppings), and broad channel coverage allowing resource flexibility. Emphasized partnership model and ability to solve operator problems as key differentiator.

Food service 7% sales growth with volume growth despite traffic softnessDirect sales team working in collaboration/problem-solving mode with operatorsKitchen shortcuts and labor savings solutionsAffordable menu options

Answers to last quarter's watch list

Q2 FY2026 adj. EPS landing flat to slightly up vs. the prior-year base — a miss off this already-cautious guide would force a second FY range reset. Adj. EPS came in at $0.40 vs. PY $0.35 — up 14% YoY, materially above the "flat to slightly up" framing. The beat is decisive and removes near-term FY range risk on this dimension. Status: Resolved positively
Whether the logistics cost pressure persists past Q2 or proves "seasonal" as management hopes. A sustained logistics drag would consume the back-half commodity easing that anchors the reaffirmed FY range. Management confirmed fuel costs added incremental Q2 pressure and projected logistics to continue weighing on YoY results into Q3 — not seasonal. The drag is now an explicit Q3 headwind component. Status: Resolved negatively
Retail organic net sales returning to flat or positive. Two consecutive quarters at -2% organic would pressure the reaffirmed +1% to +4% FY organic guide regardless of Foodservice strength. Retail revenue grew +0.3% YoY (improved from Q1's -2.2% reported), and Retail segment profit grew +13.5%. The volume recovery is incomplete but trajectory is positive; total organic growth of +3.3% comfortably sits within the FY range. Status: Resolved positively
H2 FY2026 EPS run-rate required to hit reaffirmed adj. FY $1.43–$1.51: roughly $0.75–$0.83 against an H1 base of ~$0.68. Watch whether Q3 prints above $0.37 to keep the FY range mathematically achievable without an outsized Q4. H1 actual landed at $0.74 ($0.34 + $0.40) vs. the expected ~$0.68 — a 6-cent cushion. But the Q3 guide of "in line with prior year" puts Q3 below the $0.37 threshold, which loads Q4 with the FY upside. The H1 cushion offsets the Q3 reset, but Q4 is now mathematically loaded. Status: Resolved mixed — H1 strong, Q3 guide softer than threshold, FY achievable with Q4 execution
Foodservice organic growth holding at or above +7%. The 10-quarter streak is the only structural margin lever fully working; any deceleration removes the offset to Retail weakness. Foodservice revenue grew +6.4% YoY with segment profit +10.8% and 11 consecutive quarters of organic growth. Slight deceleration from +7% threshold but volume growth continued despite industry traffic softness. Within the spirit of the watch item; segment profit growth confirms the margin lever still works. Status: Continue monitoring — growth slightly below threshold, profit lever intact
Any further portfolio divestiture announcements beyond whole-bird turkey. Management's "advantaged protein-centric portfolio" language combined with the turkey exit suggests more commodity-exposed pieces may be on the block. No new divestiture announcements this quarter. Management did flag "structural pressure" in select retail brands requiring "targeted repositioning actions" — Planters and Skippy named in Q&A — but no exit was disclosed. Status: Continue monitoring

What to watch into next quarter

Q3 FY2026 adj. EPS landing at or above the prior-year level. A print below the prior-year base invalidates the qualitative guide management just issued and forces a second look at FY achievability with one quarter remaining.

Q4 FY2026 adj. EPS required to hit reaffirmed FY $1.43–$1.51 against H1 base of $0.74 and a roughly flat-YoY Q3. With Q3 implied at prior-year levels, Q4 carries the bulk of the FY upside — management explicitly signaled "double-digit bottom line increase in Q4" is embedded in holding the range.

Whether Retail segment profit growth of +13.5% can be sustained as the H1 pricing wave matures and lapping begins. Q2 strength relied on the 90-day-lagged second pricing wave; that benefit narrows by Q4.

Identification of which retail brands beyond Planters and Skippy require "structural repositioning." Management's introduction of this category in Q2 implies more disclosures coming on the Q3 or Q4 call.

Foodservice organic growth holding at or above +6%. A drop below mid-single-digits removes the offset to retail brand repositioning costs and Q3 cost pressure.

Fuel and freight cost trajectory into Q4. Management projected logistics to weigh on YoY results through Q3 but implied easing in Q4 as the anchor for the FY upper-half framing; persistent pressure beyond Q3 would force a FY range cut.

GAAP EPS range tracking against the narrowed $1.28–$1.37 band. The narrow-down was the only quantitative range change this quarter; further narrowing on Q3 would be the first formal FY range walk-down.

Sources

  1. Hormel Foods Q2 FY2026 Earnings Release (SEC filing): https://www.sec.gov/Archives/edgar/data/48465/000004846526000024/hormelearningsreleaseq22026.htm
  2. Hormel Foods Q2 FY2026 earnings conference call prepared remarks and Q&A (May 28, 2026)

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