HRL
Hormel Foods Corporation
$21.24
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Fair Value
Trading 21.5% below fair value
You pay
$21.24
Bear
$22.28
Fair
$27.05
Bull
$31.82
Bear
$22.28
+4.9%
$1.61 × 14x P/E
Fair
$27.05
+27.4%
$1.61 × 17x P/E
Bull
$31.82
+49.8%
$1.61 × 20x P/E
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
13.2x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $26.20 from 29 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $27.05 per share.
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.
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