HSY
The Hershey Company
$172.14
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Overvalued
Trading 7.5% above fair value
You pay
$172.14
Bear
$131.83
Fair
$160.08
Bull
$188.33
Bear
$131.83
-23.4%
$7.96 × 14x P/E
Fair
$160.08
-7.0%
$7.96 × 17x P/E
Bull
$188.33
+9.4%
$7.96 × 20x P/E
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
21.6x
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 $217.85 from 35 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $160.08 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 $217.85 (from 35 analysts). Our estimate is 38% 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