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

Zacks Equity Research
Aaron's (AAN) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 company to watch right now is Tyson Foods (TSN). TSN is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 9.94 right now. For comparison, its industry sports an average P/E of 14.24. Over the past year, TSN's Forward P/E has been as high as 13.73 and as low as 8.38, with a median of 10.11.

TSN is also sporting a PEG ratio of 0.90. 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 industry has an average PEG of 1.51 right now. Over the last 12 months, TSN's PEG has been as high as 1.08 and as low as 0.76, with a median of 0.92.

Investors should also recognize that TSN has a P/B ratio of 1.71. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 2.57. Over the past 12 months, TSN's P/B has been as high as 2.49 and as low as 1.45, with a median of 1.87.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TSN has a P/S ratio of 0.55. This compares to its industry's average P/S of 0.71.

Finally, we should also recognize that TSN has a P/CF ratio of 5.56. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. TSN's current P/CF looks attractive when compared to its industry's average P/CF of 9.55. Within the past 12 months, TSN's P/CF has been as high as 8.30 and as low as 4.70, with a median of 6.18.

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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