HSY
The Hershey Company
$160.17
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 18.4% above fair value
You pay
$160.17
Bear
$111.44
Fair
$135.32
Bull
$159.20
Bear
$111.44
-30.4%
$7.96 × 14x P/E
Fair
$135.32
-15.5%
$7.96 × 17x P/E
Bull
$159.20
-0.6%
$7.96 × 20x P/E
Adjust Assumptions
17.0x
7.96$
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
20.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (35 analysts)
$204.62
Divergence from AlphaVal
34%
Summary
Applying a 17x P/E to adjusted EPS of $7.96, the base-case value is $135.32 per share.
Warnings
The company's reported profits differ from official accounting profits by 83%. Check what costs are being left out of the adjusted number.
The company pays out 132% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Wall Street's average price target is $204.62 (from 35 analysts). Our estimate is 34% below the consensus -- consider that gap carefully.
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