ing_rivera

Expect Meat Consumption to Rise for Smithfield and Tyson

SFD and TSN, this year 2008, for the first time in the last 10 years traded below their tangible equity, it was about time! From that point they had jumped over a 100% already, approximately to their intrinsic value or a bit above it.

The stock market just follow business economics under the long term, the economic rule that apply to both of these is "businesses in perfect competition earn zero economic profit in the long term" therefore they can't be worth more than their tangible equity. SFD and TSN are big and might have a competitive advantage which makes them more valuable but I doubt is much more than twice their tangible equity, since they operate in commodity industries.