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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Tyson Foods Inc. (TSN - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Tyson Foods has a trailing twelve months PE ratio of 13.17, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.49. If we focus on the stock’s long-term PE trend, the current level puts Tyson Foods’ current PE ratio tad below its midpoint over the past five years, with the number having trended downwards over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Food-Meat Products sub-industry’s trailing twelve months PE ratio, which stands at 14.93. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Tyson Foods has a forward PE ratio (price relative to this year’s earnings) of just 12.78, so it is fair to say that a slightly more value-oriented path may be ahead for Apple stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Tyson Foods has a P/S ratio of about 0.64. This is much lower than the S&P 500 average, which comes in at 3.11 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Tyson Foods currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Tyson Foods a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Tyson Foods is just 1.16, a level that is lower than the industry average of 1.35. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate.
Additionally, its P/CF ratio (another great indicator of value) comes in at 5.91, which is lower than the industry average of 6.68. Clearly, TSN is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Tyson Foods might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘D’. This gives TSN a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been somewhat mixed. The current quarter has seen two estimates go south in the past sixty days compared to no movement in the opposite direction, while the full year estimate has seen three up and no down over the same time period.
This has had just a small impact on the consensus estimate though as the current quarter consensus estimate has dropped 5.3% in the past two months, while the full year estimate has inched upper by 2.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
The stock has a long-term expected earnings growth rate of 11%. These bullish sentiments justify the stock’s Zacks Rank #2 (Buy) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Tyson Foods is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among the Top 21%) instills investor confidence. However, it is hard to get too excited about this company overall as over the past one year, the Zacks Food-Meat Products industry has underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happen this stock could be a compelling pick.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>
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Is Tyson Foods a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Tyson Foods Inc. (TSN - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Tyson Foods has a trailing twelve months PE ratio of 13.17, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.49. If we focus on the stock’s long-term PE trend, the current level puts Tyson Foods’ current PE ratio tad below its midpoint over the past five years, with the number having trended downwards over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Food-Meat Products sub-industry’s trailing twelve months PE ratio, which stands at 14.93. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Tyson Foods has a forward PE ratio (price relative to this year’s earnings) of just 12.78, so it is fair to say that a slightly more value-oriented path may be ahead for Apple stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Tyson Foods has a P/S ratio of about 0.64. This is much lower than the S&P 500 average, which comes in at 3.11 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Tyson Foods currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Tyson Foods a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Tyson Foods is just 1.16, a level that is lower than the industry average of 1.35. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate.
Additionally, its P/CF ratio (another great indicator of value) comes in at 5.91, which is lower than the industry average of 6.68. Clearly, TSN is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Tyson Foods might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘D’. This gives TSN a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been somewhat mixed. The current quarter has seen two estimates go south in the past sixty days compared to no movement in the opposite direction, while the full year estimate has seen three up and no down over the same time period.
This has had just a small impact on the consensus estimate though as the current quarter consensus estimate has dropped 5.3% in the past two months, while the full year estimate has inched upper by 2.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Tyson Foods, Inc. Price and Consensus
Tyson Foods, Inc. Price and Consensus | Tyson Foods, Inc. Quote
The stock has a long-term expected earnings growth rate of 11%. These bullish sentiments justify the stock’s Zacks Rank #2 (Buy) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Tyson Foods is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Furthermore, a robust industry rank (among the Top 21%) instills investor confidence. However, it is hard to get too excited about this company overall as over the past one year, the Zacks Food-Meat Products industry has underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happen this stock could be a compelling pick.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>