As of May 31, 2025, Hershey Co's estimated intrinsic value ranges from $135.73 to $237.11 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $237.11 | +47.6% |
| Discounted Cash Flow (5Y) | $201.85 | +25.6% |
| Dividend Discount Model (Multi-Stage) | $171.55 | +6.8% |
| Dividend Discount Model (Stable) | $135.73 | -15.5% |
| Earnings Power Value | $141.57 | -11.9% |
Is Hershey Co (HSY) undervalued or overvalued?
With the current market price at $160.69, the stock appears to be moderately undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Hershey Co'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 | 0.37 | 0.53 |
| Cost of equity | 5.6% | 7.8% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 14.2% | 14.4% |
| Debt/Equity ratio | 0.16 | 0.16 |
| After-tax WACC | 5.3% | 7.3% |
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 | $202 | $45,297M | 76.9% |
| 10-Year Growth | $237 | $52,439M | 60.6% |
| 5-Year EBITDA | $175 | $39,852M | 73.8% |
| 10-Year EBITDA | $212 | $47,295M | 56.4% |
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 | $2,017M |
| Discount Rate (WACC) | 7.3% - 5.3% |
| Enterprise Value | $27,779M - $38,393M |
| Net Debt | $4,410M |
| Equity Value | $23,369M - $33,983M |
| Outstanding Shares | 203M |
| Fair Value | $115 - $168 |
| Selected Fair Value | $141.57 |
| Metric | Value |
|---|---|
| Market Capitalization | $32549M |
| Enterprise Value | $36960M |
| Trailing P/E | 17.01 |
| Forward P/E | 14.34 |
| Trailing EV/EBITDA | 10.00 |
| Current Dividend Yield | 344.16% |
| Dividend Growth Rate (5Y) | 14.07% |
| Debt-to-Equity Ratio | 0.16 |
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% | $71.13 |
| Discounted Cash Flow (5Y) | 25% | $50.46 |
| Dividend Discount Model (Multi-Stage) | 20% | $34.31 |
| Dividend Discount Model (Stable) | 15% | $20.36 |
| Earnings Power Value | 10% | $14.16 |
| Weighted Average | 100% | $190.42 |
Based on our comprehensive valuation analysis, Hershey Co's weighted average intrinsic value is $190.42, which is approximately 18.5% above the current market price of $160.69.
Key investment considerations:
Given these factors, we believe Hershey Co is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.