DCF Studio

    TSN · NYQ · Consumer Defensive

    Tyson Foods, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 51.50

    Market price

    USD 52.77

    Implied upside

    -2.4%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 51.50-2.4%
    Exit multiple
    USD 61.48+16.5%
    Market price
    USD 52.77

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 54.8bnUSD 55.2bnUSD 55.6bnUSD 56.0bnUSD 56.4bn+0.7%
    EBITUSD 2.0bnUSD 2.0bnUSD 2.0bnUSD 2.0bnUSD 2.0bn+0.7%
    NOPATUSD 1.5bnUSD 1.6bnUSD 1.6bnUSD 1.6bnUSD 1.6bn+0.7%
    Add depreciation & amortisationUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.4bn+0.7%
    Less capital expenditureUSD -1.5bnUSD -1.5bnUSD -1.5bnUSD -1.6bnUSD -1.6bn+0.7%
    Less increase in working capitalUSD -36.7mUSD -37.0mUSD -37.2mUSD -37.5mUSD -37.8m+0.7%
    Free cashflow to firmUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.4bn+0.7%
    Discount factor0.96760.90580.84800.79390.7432-
    Present valueUSD 1.3bnUSD 1.2bnUSD 1.2bnUSD 1.1bnUSD 1.0bn-5.7%
    Present Value Of The ForecastUSD 5.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.579Reported 0.371, pulled toward 1.0 (Blume)
    Cost of equity8.18%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 18.6bn67.8% of capital
    Total debtUSD 8.8bn32.2% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC6.82%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 51.50

    78% of EV

    Forecast FCFF, final year
    USD 1.4bn
    Capex at depreciation, working capital in reinvestment
    USD 1.8bn
    Less reinvestment at g/ROIC (36.7% of NOPAT)
    USD -661.2m
    Capitalised
    USD 1.1bn
    ROIC (WACC floor)
    6.8%
    Terminal value, undiscounted
    USD 27.1bn
    Terminal value, discounted
    USD 20.1bn
    Enterprise value
    USD 26.0bn
    Less net debt
    USD 7.6bn
    Equity value
    USD 18.4bn

    Exit at 9.3x EBITDA

    Value per shareUSD 61.48

    80% of EV

    Terminal value, undiscounted
    USD 31.9bn
    Terminal value, discounted
    USD 23.7bn
    Enterprise value
    USD 29.5bn
    Less net debt
    USD 7.6bn
    Equity value
    USD 21.9bn

    Spread between methods: 18%.

    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%
    4.82%81.9982.4182.8483.2683.69
    5.82%63.7864.1264.4564.7965.13
    6.82%50.9551.2251.5051.7752.05
    7.82%41.4241.6541.8842.1142.35
    8.82%34.0834.2834.4734.6734.87

    Outlined: this model. Green text: above today's price of 52.77. 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.

    InputModelImpliedGap
    Revenue growth, every year0.7%1.2%+0.5pp
    EBIT margin3.6%3.6%+0.1pp
    Discount rate6.8%6.7%-0.1pp
    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.