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Kellanova (K) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Kellanova (K)

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Intrinsic Value (DCF)

Current$83.44
→
Intrinsic$59.22
-29%
$35.24$59.22$104.78
Market implies 21% growth for 5 years
K trades at a premium to our conservative estimate — investors expect above-average performance.
At $83, the market prices in continued strong cash flow growth (21%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $35 → Bull $105. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →10%12%14%16%
8%$75$82$91$100
10%$48$53$59$65
12%$33$37$42$46
14%$24$27$31$34

Bull Case

  • Bull case ($105) offers 26% upside at 17% growth, 9% discount
  • Conservative 14% growth assumption is achievable based on track record

Bear Case

  • Bear case ($35) implies 58% downside at 11% growth, 12% discount
  • Price reflects 21% growth expectations vs 14% historical — high bar to clear
  • Trading 29% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$1.29B
Year 2$1.47B
Year 3$1.67B
Year 4$1.91B
Year 5$2.17B
Terminal$31.96B

📐 Model Inputs

Growth Rate13.9%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.13BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is K stock undervalued or overvalued?
🔴 OVERVALUED

K trades at $83.44 vs. our DCF-derived intrinsic value of $59.22, implying -29% downside. Using a 10.0% WACC and 13.9% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($92.35) suggests limited upside.

What is K's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.13B, projected at 13.9% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $5.65B net debt and dividing by 0.35B shares: Bear $35.68 | Base $59.22 | Bull $92.35. Current price $83.44 implies -29% to base case.

How is K's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 13.9% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($26.14B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 23.1x.