Should Value Investors Buy Tyson Foods (TSN) Stock?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
Tyson Foods (TSN) is a stock many investors are watching right now. TSN is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 12.20, which compares to its industry's average of 18.22. Over the last 12 months, TSN's Forward P/E has been as high as 15.20 and as low as 6.76, with a median of 12.23.
We also note that TSN holds a PEG ratio of 2.24. 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 2.50. Over the past 52 weeks, TSN's PEG has been as high as 3.36 and as low as 0.81, with a median of 1.41.
Another valuation metric that we should highlight is TSN's P/B ratio of 1.54. The P/B is a method of comparing a stock's market value to 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 2.55. Within the past 52 weeks, TSN's P/B has been as high as 2.41 and as low as 1.11, with a median of 2.06.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. 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 0.51. This compares to its industry's average P/S of 0.61.
Finally, investors will want to recognize that TSN has a P/CF ratio of 7.20. 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 13.38. Over the past 52 weeks, TSN's P/CF has been as high as 10.84 and as low as 5.12, with a median of 9.34.
These are just a handful of the figures considered in Tyson Foods's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that TSN is an impressive value stock right now.
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