As of June 7, 2025, Hormel Foods Corp's estimated intrinsic value ranges from $22.49 to $35.19 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $35.19 | +14.8% |
| Discounted Cash Flow (5Y) | $32.91 | +7.3% |
| Dividend Discount Model (Multi-Stage) | $34.07 | +11.1% |
| Dividend Discount Model (Stable) | $32.40 | +5.7% |
| Earnings Power Value | $22.49 | -26.7% |
Is Hormel Foods Corp (HRL) undervalued or overvalued?
With the current market price at $30.66, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Hormel Foods Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.36 | 0.38 |
| Cost of equity | 5.5% | 7.0% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 20.8% | 21.8% |
| Debt/Equity ratio | 0.17 | 0.17 |
| After-tax WACC | 5.2% | 6.5% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $33 | $20,286M | 84.7% |
| 10-Year Growth | $35 | $21,541M | 70.6% |
| 5-Year EBITDA | $23 | $14,836M | 79.0% |
| 10-Year EBITDA | $27 | $16,890M | 62.5% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $836M |
| Discount Rate (WACC) | 6.5% - 5.2% |
| Enterprise Value | $12,916M - $16,193M |
| Net Debt | $2,188M |
| Equity Value | $10,728M - $14,005M |
| Outstanding Shares | 550M |
| Fair Value | $20 - $25 |
| Selected Fair Value | $22.49 |
| Metric | Value |
|---|---|
| Market Capitalization | $16860M |
| Enterprise Value | $19048M |
| Trailing P/E | 22.56 |
| Forward P/E | 20.80 |
| Trailing EV/EBITDA | 9.90 |
| Current Dividend Yield | 370.19% |
| Dividend Growth Rate (5Y) | 5.98% |
| Debt-to-Equity Ratio | 0.17 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $10.56 |
| Discounted Cash Flow (5Y) | 25% | $8.23 |
| Dividend Discount Model (Multi-Stage) | 20% | $6.81 |
| Dividend Discount Model (Stable) | 15% | $4.86 |
| Earnings Power Value | 10% | $2.25 |
| Weighted Average | 100% | $32.71 |
Based on our comprehensive valuation analysis, Hormel Foods Corp's weighted average intrinsic value is $32.71, which is approximately 6.7% above the current market price of $30.66.
Key investment considerations:
Given these factors, we believe Hormel Foods Corp is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.