DCF Studio

    HRL · NYQ · Consumer Defensive

    Hormel Foods Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 23.83

    Market price

    USD 21.47

    Implied upside

    +11.0%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-10-31

    Value Per Share

    Perpetuity growth
    USD 23.83+11.0%
    Exit multiple
    USD 25.20+17.4%
    Market price
    USD 21.47

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m405m810mFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 12.1bnUSD 12.4bnUSD 12.6bnUSD 12.9bnUSD 13.1bnUSD 13.4bnUSD 13.7bnUSD 14.1bnUSD 14.4bnUSD 14.8bn+2.2%
    EBITUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.1bnUSD 1.2bnUSD 1.2bnUSD 1.2bnUSD 1.3bnUSD 1.3bn+2.2%
    NOPATUSD 836.8mUSD 853.2mUSD 870.4mUSD 888.6mUSD 907.8mUSD 928.0mUSD 949.3mUSD 971.7mUSD 995.4mUSD 1.0bn+2.2%
    Add depreciation & amortisationUSD 252.2mUSD 257.1mUSD 262.3mUSD 267.8mUSD 273.6mUSD 279.7mUSD 286.1mUSD 292.9mUSD 300.0mUSD 307.5m+2.2%
    Less capital expenditureUSD -278.3mUSD -310.5mUSD -344.0mUSD -379.0mUSD -415.6mUSD -454.0mUSD -494.1mUSD -536.2mUSD -580.5mUSD -626.9m+9.4%
    Capex, % of revenue2.3%2.5%2.7%2.9%3.2%3.4%3.6%3.8%4.0%4.2%-
    Less increase in working capitalUSD -1.2mUSD -33.6mUSD -35.5mUSD -37.4mUSD -39.5mUSD -41.6mUSD -43.8mUSD -46.2mUSD -48.6mUSD -51.2m+51.6%
    Free cashflow to firmUSD 809.5mUSD 766.2mUSD 753.2mUSD 740.0mUSD 726.3mUSD 712.1mUSD 697.4mUSD 682.2mUSD 666.3mUSD 649.6m-2.4%
    Discount factor0.96910.91020.85480.80280.75390.70810.66500.62460.58660.5509-
    Present valueUSD 784.5mUSD 697.4mUSD 643.9mUSD 594.0mUSD 547.6mUSD 504.2mUSD 463.8mUSD 426.1mUSD 390.8mUSD 357.8m-
    Present Value Of The ForecastUSD 5.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.506Reported 0.262, pulled toward 1.0 (Blume)
    Cost of equity7.03%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 11.5x interest cover. Book interest / average debt was lower, at 2.7%.
    Market capitalisationUSD 11.8bn80.5% of capital
    Total debtUSD 2.9bn19.5% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC6.48%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 23.83

    65% of EV

    Forecast FCFF, final year
    USD 649.6m
    Capex at depreciation, working capital in reinvestment
    USD 1.0bn
    Less reinvestment at g/ROIC (33.4% of NOPAT)
    USD -348.5m
    Capitalised
    USD 694.7m
    ROIC (reported)
    7.5%
    Terminal value, undiscounted
    USD 17.9bn
    Terminal value, discounted
    USD 9.9bn
    Enterprise value
    USD 15.3bn
    Less net debt
    USD 2.2bn
    Equity value
    USD 13.1bn

    Exit at 12.1x EBITDA

    Value per shareUSD 25.20

    66% of EV

    Terminal value, undiscounted
    USD 19.3bn
    Terminal value, discounted
    USD 10.6bn
    Enterprise value
    USD 16.0bn
    Less net debt
    USD 2.2bn
    Equity value
    USD 13.9bn

    Spread between methods: 6%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.48%41.7244.9249.9258.5476.35
    5.48%30.4531.2832.5034.3637.31
    6.48%23.7123.7323.8324.0524.46
    7.48%19.2318.9318.6318.3318.03
    8.48%16.4516.2015.9515.7015.45

    Outlined: this model. Green text: above today's price of 21.47. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year-1.0%2.0%0.9%
    EBIT margin10.3%8.7%8.0%
    Discount rate-6.5%6.9%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.