Definitive Analysis
Definitive Analysis
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The Hershey Company (HSY)

Company Dividend Discount ModelIndustry: Food ConfectionersSector: Consumer Defensive

Valuation Snapshot

Stable Growth$156.88 - $416.16$239.89
Multi-Stage$114.32 - $124.53$119.33
Blended Fair Value$179.61
Current Price$184.11
Upside-2.44%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS12.19%9.43%5.344.373.813.373.153.002.772.592.462.34
YoY Growth--22.02%14.71%12.98%7.06%4.98%8.50%6.89%5.37%4.90%8.11%
Dividend Yield--3.12%2.21%1.48%1.56%1.98%2.18%2.43%2.67%2.26%2.53%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)1,359.83
(-) Cash Dividends Paid (M)1,084.45
(=) Cash Retained (M)275.39
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)271.97169.98101.99
Cash Retained (M)275.39275.39275.39
(-) Cash Required (M)-271.97-169.98-101.99
(=) Excess Retained (M)3.42105.41173.40
(/) Shares Outstanding (M)203.33203.33203.33
(=) Excess Retained per Share0.020.520.85
LTM Dividend per Share5.335.335.33
(+) Excess Retained per Share0.020.520.85
(=) Adjusted Dividend5.355.856.19
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Fair Value$156.88$239.89$416.16
Upside / Downside-14.79%30.30%126.04%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)1,359.831,448.221,542.361,642.611,749.381,863.091,918.98
Payout Ratio79.75%81.80%83.85%85.90%87.95%90.00%92.50%
Projected Dividends (M)1,084.451,184.631,293.251,410.991,538.571,676.781,775.06

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)1,075.641,085.841,096.04
Year 2 PV (M)1,066.241,086.551,107.05
Year 3 PV (M)1,056.291,086.611,117.51
Year 4 PV (M)1,045.831,086.051,127.42
Year 5 PV (M)1,034.921,084.911,136.81
PV of Terminal Value (M)17,966.1718,833.9419,734.93
Equity Value (M)23,245.1024,263.9025,319.75
Shares Outstanding (M)203.33203.33203.33
Fair Value$114.32$119.33$124.53
Upside / Downside-37.90%-35.18%-32.36%

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