Hormel Foods Case Analysis

Hormel Foods is one of the biggest companies in its market. However, how does it compare to its biggest competitor, Tyson? In order to decipher which one is more successful we have decided to analyze the companies from the perspective of a potential investor. We will start this process by contrasting the 2014 Common Size Income Statement of the two companies, then by comparing the different ratios of each, and finally by analyzing some additional information. By analyzing these differences and by understanding what the differences mean for each company, we can easily determine which company we would invest in and, therefore, which one is more successful. Also, within this analysis we will also seek how Hormel compares against its past self

When it comes to cost of products sold Hormel has 83.9% in 2013 and 83.2% in 2014. Although this is a small decrease, the data from the statement sheets does show that Hormel’s cost of products is going down. It also is much better than Tyson which has a cost of goods sold ratio of 92.9%. In terms of gross profit, Hormel does better than Tyson with 16.8% compared to 7.1%. Hormel does better in gross profit during 2014 with an increase of .7% from 2013 to 2014. When looking at expenses, Hormel in 2013 had 7.17% for selling and administrative expense, however they decreased to 6.99% in 2014 showing that they reduced their expenses over the year. Hormel still does worse than Tyson in this area due to Tyson having only 3.34% selling and administrative expense. Looking at the operating income as a whole reveals that although Tyson has a smaller expense they also have a smaller operating income with 3.81%, while Hormel has an operating income of 10% in 2014. Hormel increased the operating income by .8% from 2013 to 2014. Ultimately net earnings is one of the most important aspects and Hormel increased from 2013 to 2014. In 2013 Hormel has 6.01% and in 2014 6.47%. This is very different from Tyson’s net earnings which is 7.59%. These net earnings are attributed to each respective corporation and have been adjusted for noncontrolling