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Is Tyson Foods (TSN) a Great Value Stock Right Now?

Zacks Equity Research
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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.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Tyson Foods (TSN). TSN is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 11.26, while its industry has an average P/E of 14.93. TSN's Forward P/E has been as high as 11.28 and as low as 8.38, with a median of 10.09, all within the past year.

TSN is also sporting a PEG ratio of 1.25. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TSN's PEG compares to its industry's average PEG of 1.74. Over the last 12 months, TSN's PEG has been as high as 1.25 and as low as 0.76, with a median of 0.92.

Investors should also recognize that TSN has a P/B ratio of 1.93. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. TSN's current P/B looks attractive when compared to its industry's average P/B of 2.70. Over the past 12 months, TSN's P/B has been as high as 2.18 and as low as 1.45, with a median of 1.78.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. TSN has a P/S ratio of 0.64. This compares to its industry's average P/S of 0.72.

Finally, our model also underscores that TSN has a P/CF ratio of 8.79. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 12.68. Within the past 12 months, TSN's P/CF has been as high as 8.81 and as low as 4.70, with a median of 6.71.

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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