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Are Investors Undervaluing Tyson Foods (TSN) Right Now?

Zacks Equity Research

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is Tyson Foods (TSN). TSN is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 13.16 right now. For comparison, its industry sports an average P/E of 15.74. Over the past 52 weeks, TSN's Forward P/E has been as high as 13.16 and as low as 8.43, with a median of 10.27.

Investors should also note that TSN holds a PEG ratio of 1.45. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. TSN's PEG compares to its industry's average PEG of 2.10. Within the past year, TSN's PEG has been as high as 1.45 and as low as 0.77, with a median of 0.92.

We should also highlight that TSN has a P/B ratio of 2.29. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.92. Over the past 12 months, TSN's P/B has been as high as 2.29 and as low as 1.45, with a median of 1.79.

Finally, investors should note that TSN has a P/CF ratio of 10.16. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. TSN's current P/CF looks attractive when compared to its industry's average P/CF of 15.06. TSN's P/CF has been as high as 10.16 and as low as 4.70, with a median of 7.70, all within the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Tyson Foods is likely undervalued currently. And when considering the strength of its earnings outlook, TSN sticks out at as one of the market's strongest value stocks.


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