DCF Studio

    HSY · NYQ · Consumer Defensive

    The Hershey Company

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 240.39

    Market price

    USD 171.25

    Implied upside

    +40.4%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 5.5% of revenue against depreciation of 3.9%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 240.39+40.4%
    Exit multiple
    USD 262.47+53.3%
    Market price
    USD 171.25

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 12.3bnUSD 12.6bnUSD 12.8bnUSD 13.1bnUSD 13.4bnUSD 13.7bnUSD 14.1bnUSD 14.4bnUSD 14.7bnUSD 15.1bn+2.3%
    EBITUSD 2.6bnUSD 2.6bnUSD 2.7bnUSD 2.7bnUSD 2.8bnUSD 2.9bnUSD 2.9bnUSD 3.0bnUSD 3.1bnUSD 3.1bn+2.3%
    NOPATUSD 2.2bnUSD 2.2bnUSD 2.3bnUSD 2.3bnUSD 2.4bnUSD 2.5bnUSD 2.5bnUSD 2.6bnUSD 2.6bnUSD 2.7bn+2.3%
    Add depreciation & amortisationUSD 484.3mUSD 494.8mUSD 505.7mUSD 517.1mUSD 528.9mUSD 541.3mUSD 554.1mUSD 567.5mUSD 581.5mUSD 596.0m+2.3%
    Less capital expenditureUSD -670.1mUSD -688.9mUSD -708.5mUSD -728.9mUSD -750.2mUSD -772.4mUSD -795.5mUSD -819.7mUSD -844.8mUSD -871.1m+3.0%
    Capex, % of revenue5.5%5.5%5.5%5.6%5.6%5.6%5.7%5.7%5.7%5.8%-
    Less increase in working capitalUSD -66.7mUSD -29.9mUSD -31.1mUSD -32.4mUSD -33.8mUSD -35.2mUSD -36.6mUSD -38.2mUSD -39.8mUSD -41.4m-5.1%
    Free cashflow to firmUSD 1.9bnUSD 2.0bnUSD 2.1bnUSD 2.1bnUSD 2.1bnUSD 2.2bnUSD 2.2bnUSD 2.3bnUSD 2.3bnUSD 2.4bn+2.3%
    Discount factor0.97030.91340.85990.80950.76210.71740.67540.63580.59860.5635-
    Present valueUSD 1.9bnUSD 1.8bnUSD 1.8bnUSD 1.7bnUSD 1.6bnUSD 1.6bnUSD 1.5bnUSD 1.4bnUSD 1.4bnUSD 1.3bn-
    Present Value Of The ForecastUSD 16.1bn

    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
    Beta0.376Reported 0.068, pulled toward 1.0 (Blume)
    Cost of equity6.48%Risk-free + beta x equity risk premium
    Cost of debt5.44%Risk-free + 55bp, the spread for a AA rating at 6.5x interest cover. Book interest / average debt was lower, at 4.0%.
    Market capitalisationUSD 34.4bn85.7% of capital
    Total debtUSD 5.7bn14.3% of capital, book value as a proxy
    Tax rate14.2%Effective, capped at statutory
    WACC6.22%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 240.39

    70% of EV

    Forecast FCFF, final year
    USD 2.4bn
    Capex at depreciation, working capital in reinvestment
    USD 2.7bn
    Less reinvestment at g/ROIC (10.2% of NOPAT)
    USD -275.1m
    Capitalised
    USD 2.4bn
    ROIC (reported)
    24.5%
    Terminal value, undiscounted
    USD 66.7bn
    Terminal value, discounted
    USD 37.6bn
    Enterprise value
    USD 53.7bn
    Less net debt
    USD 4.8bn
    Equity value
    USD 48.9bn

    Exit at 20.0x EBITDA

    Value per shareUSD 262.47

    72% of EV

    Terminal value, undiscounted
    USD 74.7bn
    Terminal value, discounted
    USD 42.1bn
    Enterprise value
    USD 58.2bn
    Less net debt
    USD 4.8bn
    Equity value
    USD 53.4bn

    Spread between methods: 9%.

    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%
    4.22%378.40441.47541.58724.161160.19
    5.22%270.31297.81335.68390.92478.63
    6.22%208.05222.22240.39264.40297.49
    7.22%167.60175.61185.45197.77213.58
    8.22%139.23144.00149.71156.63165.15

    Outlined: this model. Green text: above today's price of 171.25. 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 year3.9%2.6%-0.9%
    EBIT margin26.1%20.8%15.5%
    Discount rate-6.2%7.6%
    Download as Excel

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