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SMITHFIELD FOODS INC (SFD) Intrinsic Value

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

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SMITHFIELD FOODS INC (SFD)

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Intrinsic Value (DCF)

Current$23.41
→
Intrinsic$56.90
+143%
$37.58$56.90$93.56
Market implies 1% growth for 5 years
DCF analysis suggests SFD could have 143% upside at 20% growth — verify assumptions match your view.
At $23, the market prices in only 1% growth — below historical 20%, suggesting low expectations.
Range: Bear $38 → Bull $94. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →16%18%20%22%
8%$70$76$83$90
10%$48$52$57$62
12%$36$39$43$46
14%$28$31$33$36

Bull Case

  • Bull case ($94) offers 300% upside at 24% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($38) with 16% growth, 12% discount rate
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5-Year Free Cash Flow Projection

Year 1$944.40M
Year 2$1.13B
Year 3$1.36B
Year 4$1.63B
Year 5$1.96B
Terminal$28.82B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$787.00MTTM 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 SFD stock undervalued or overvalued?
🟢 UNDERVALUED

SFD trades at $23.41 vs. our DCF-derived intrinsic value of $56.90, implying +162% upside. At a 10.0% WACC and 20.0% projected FCF growth, the market appears to be underpricing the present value of SFD's future cash flows. The bear case ($36.04) still suggests upside, providing margin of safety.

What is SFD's intrinsic value?

Using a 5-year DCF model: Base FCF of $787M, projected at 20.0% 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 $1.42B net debt and dividing by 0.38B shares: Bear $36.04 | Base $56.90 | Bull $87.61. Current price $23.41 implies +162% to base case.

How is SFD's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% 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 ($23.04B).

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: 29.3x.