As of June 13, 2025, Sanderson Farms Inc's estimated intrinsic value ranges from $97.31 to $413.68 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $413.68 | +102.8% |
| Discounted Cash Flow (5Y) | $375.47 | +84.1% |
| Dividend Discount Model (Multi-Stage) | $183.33 | -10.1% |
| Dividend Discount Model (Stable) | $406.55 | +99.3% |
| Earnings Power Value | $97.31 | -52.3% |
Is Sanderson Farms Inc (SAFM) undervalued or overvalued?
With the current market price at $204.00, the stock appears to be significantly 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 Sanderson Farms Inc'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 | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 1 | 1.13 |
| Cost of equity | 7.4% | 10.1% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 22.8% | 27.9% |
| Debt/Equity ratio | 1 | 1 |
| After-tax WACC | 5.2% | 6.7% |
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 | $375 | $7,551M | 78.5% |
| 10-Year Growth | $414 | $8,404M | 61.8% |
| 5-Year EBITDA | $294 | $6,553M | 75.3% |
| 10-Year EBITDA | $333 | $7,441M | 56.8% |
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 | $79M |
| Discount Rate (WACC) | 6.7% - 5.2% |
| Enterprise Value | $1,182M - $1,504M |
| Net Debt | $(829)M |
| Equity Value | $2,011M - $2,333M |
| Outstanding Shares | 22M |
| Fair Value | $90 - $105 |
| Selected Fair Value | $97.31 |
| Metric | Value |
|---|---|
| Market Capitalization | $4553M |
| Enterprise Value | $4553M |
| Trailing P/E | 0.00 |
| Forward P/E | 10.64 |
| Trailing EV/EBITDA | 7.40 |
| Current Dividend Yield | 86.35% |
| Dividend Growth Rate (5Y) | -4.07% |
| Debt-to-Equity Ratio | 0.83 |
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% | $124.10 |
| Discounted Cash Flow (5Y) | 25% | $93.87 |
| Dividend Discount Model (Multi-Stage) | 20% | $36.67 |
| Dividend Discount Model (Stable) | 15% | $60.98 |
| Earnings Power Value | 10% | $9.73 |
| Weighted Average | 100% | $325.35 |
Based on our comprehensive valuation analysis, Sanderson Farms Inc's weighted average intrinsic value is $325.35, which is approximately 59.5% above the current market price of $204.00.
Key investment considerations:
Given these factors, we believe Sanderson Farms Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.