HRL
Hormel Foods Corporation
$19.19
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Undervalued
Trading 29.8% below fair value
You pay
$19.19
Bear
$22.51
Fair
$27.34
Bull
$32.16
Bear
$22.51
+17.3%
$1.61 × 14x P/E
Fair
$27.34
+42.4%
$1.61 × 17x P/E
Bull
$32.16
+67.6%
$1.61 × 20x P/E
Adjust Assumptions
17.0x
1.61$
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
11.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (30 analysts)
$24.25
Divergence from AlphaVal
13%
Summary
Applying a 17x P/E to adjusted EPS of $1.61, the base-case value is $27.34 per share. DDM cross-check: $21.33.
Warnings
The company's reported profits differ from official accounting profits by 85%. Check what costs are being left out of the adjusted number.
The company pays out 134% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $21.33 (below our primary estimate by 22%). Large gaps may signal the dividend doesn't reflect full earning power.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples