Today we're going to take a closer look at large-cap Consumer Staples company Tyson Foods, whose shares are currently trading at $50.23. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
Trades Below Its Graham Number but Has an Elevated P/E Ratio:
Tyson Foods, Inc., together with its subsidiaries, operates as a food company worldwide. The company belongs to the Consumer Staples sector, which has an average price to earnings (P/E) ratio of 24.36 and an average price to book (P/B) ratio of 4.29. In contrast, Tyson Foods has a trailing 12 month P/E ratio of 53.4 and a P/B ratio of 0.95.
Tyson Foods's PEG ratio is 5.35, which shows that the stock is probably overvalued in terms of its estimated growth. For reference, a PEG ratio near or below 1 is a potential signal that a company is undervalued.
Shareholders Are Confronted With a Declining EPS Growth Trend:
| 2017-11-13 | 2018-11-13 | 2019-11-12 | 2020-11-16 | 2021-11-15 | 2022-11-14 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $38,260 | $40,052 | $42,405 | $43,185 | $47,049 | $53,282 |
| Gross Margins | 13.0% | 13.0% | 12.0% | 12.0% | 14.0% | 13.0% |
| Operating Margins | 8% | 7% | 7% | 7% | 9% | 8% |
| Net Margins | 5.0% | 7.0% | 5.0% | 5.0% | 6.0% | 6.0% |
| Net Income (MM) | $1,774 | $2,970 | $1,980 | $2,061 | $3,047 | $3,238 |
| Net Interest Expense (MM) | -$272 | -$343 | -$451 | -$475 | -$420 | -$348 |
| Depreciation & Amort. (MM) | -$761 | -$943 | -$1,098 | -$1,192 | -$1,214 | -$1,202 |
| Earnings Per Share | $4.79 | $8.05 | $5.41 | $5.65 | $8.35 | $8.92 |
| EPS Growth | n/a | 68.06% | -32.8% | 4.44% | 47.79% | 6.83% |
| Diluted Shares (MM) | 370 | 369 | 366 | 365 | 365 | 363 |
| Free Cash Flow (MM) | $3,668 | $4,163 | $3,772 | $5,073 | $5,049 | $4,574 |
| Capital Expenditures (MM) | -$1,069 | -$1,200 | -$1,259 | -$1,199 | -$1,209 | -$1,887 |
| Net Current Assets (MM) | -$11,249 | -$10,610 | -$11,834 | -$11,472 | -$8,678 | -$7,425 |
| Long Term Debt (MM) | $9,297 | $7,962 | $9,830 | $10,791 | $8,319 | $7,900 |
| Net Debt / EBITDA | 2.68 | 2.45 | 2.96 | 2.36 | 1.23 | 1.31 |
Tyson Foods has weak revenue growth and a flat capital expenditure trend, weak operating margings with a stable trend, and irregular cash flows. In addition, we note a decent current ratio. We also note that the company has healthy leverage working in its favor. However, the firm suffers from slimmer gross margins than its peers and declining EPS growth.
