Tyson Foods, Inc.TSNNYSE

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $380.86 per share(market-calibrated)

+505.4%

Upside to Fair Value

Current

$62.91

Pure Model

$414.61

Fair Value

$380.86

Bull Case

$484.73

Bear Case

$343.63

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $414.61.

What's Driving This Ratingfor TSN

✓

CapEx already efficient

CapEx at 2.62% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 4.51% — below the sector mature average of 16.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $9.4B (13.59% margin).

→

Moderate revenue growth

Analyst consensus projects 3.69% revenue growth, fading to 2.50% by Year 10. Revenue reaches $69.2B (vs $54.4B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

→

Moderate cash flow conversion

Year 10 FCF/EBITDA conversion is 57.12% — acceptable but leaves room for improvement. High reinvestment needs consume a meaningful portion of operating cash flow.

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.44

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)6.48%

Cost of Debt

Pre-tax Cost of Debt4.71%

Tax Rate30.00%

After-tax Cost of Debt3.29%

Equity Weight (E/V)71.26%

Debt Weight (D/V)28.74%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (71.26% × 6.48%) + (28.74% × 3.29%)

= 5.57%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$56.4B	$58.2B	$61.2B	$64.3B	$69.2B
EBIT	$2.5B	$2.6B	$5.3B	$7.3B	$9.4B
Tax	$764M	$788M	$1.6B	$2.2B	$2.8B
NOPAT	$1.8B	$1.8B	$3.7B	$5.1B	$6.6B
+ Depreciation	$1.4B	$1.4B	$1.5B	$1.5B	$1.7B
- Capex	$1.5B	$1.5B	$1.6B	$1.7B	$1.8B
- Δ NWC	$125M	$83M	$93M	$98M	$105M
Free Cash Flow	$1.5B	$1.6B	$3.5B	$4.8B	$6.3B
Discount Factor	0.947	0.850	0.763	0.684	0.582
Present Value	$1.4B	$1.4B	$2.6B	$3.3B	$3.7B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$6.3B

Terminal Growth Rate2.50%

WACC5.57%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$211.1B

PV of Terminal Value$122.8B

Exit Multiple Method

Year 10 EBITDA$11.1B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$221.2B

PV of Terminal Value$128.7B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$26.2B

PV of Terminal Value$122.8B

Enterprise Value$148.9B

(-) Net Debt$7.6B

Equity Value$141.3B

Shares Outstanding348M

Price per Share$406.16

Exit Multiple Method

PV of Projected FCFs$26.2B

PV of Terminal Value$128.7B

Enterprise Value$154.8B

(-) Net Debt$7.6B

Equity Value$147.2B

Shares Outstanding348M

Price per Share$423.07

Pure Model Fair Value

$414.61

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
3.57%	$600.95	$588.45	$562.65	$538.09	$514.69
4.57%	$453.58	$492.12	$549.31	$538.09	$514.69
5.57%	$369.95	$389.15	$414.61	$449.99	$502.49
6.57%	$313.39	$324.45	$338.23	$355.87	$379.26
7.57%	$271.29	$278.26	$286.60	$296.77	$309.43

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$343.63

446.2% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.55

Base Case

$414.61

559.1% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.44

Bull Case

$484.73

670.5% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.37

Key Assumptions & Drivers• Consumer Defensive Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth3.69%

Year 3 Revenue Growth2.33%

Year 5 Revenue Growth2.50%

Year 7 Revenue Growth2.50%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin4.51%

Terminal EBIT Margin16.00%

Tax Rate30.00%

Historical Capex / Rev2.62%

NWC / Revenue6.23%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Defensive sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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