HSY
The Hershey Company
$194.78
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 21.0% above fair value
You pay
$194.78
Bear
$132.56
Fair
$160.96
Bull
$189.37
Bear
$132.56
-31.9%
$7.96 × 14x P/E
Fair
$160.96
-17.4%
$7.96 × 17x P/E
Bull
$189.37
-2.8%
$7.96 × 20x P/E
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
24.5x
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 $220.79 from 35 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $160.96 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 130% 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 $220.79 (from 35 analysts). Our estimate is 39% 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