HRL
Hormel Foods Corporation
$24.73
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 6.2% below fair value
You pay
$24.73
Bear
$21.72
Fair
$26.38
Bull
$31.03
Bear
$21.72
-12.2%
$1.61 × 14x P/E
Fair
$26.38
+6.7%
$1.61 × 17x P/E
Bull
$31.03
+25.5%
$1.61 × 20x P/E
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
15.4x
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 $23.50 from 29 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $26.38 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