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Tyson Foods - At The Cusp Of Full Valuation

Apr. 05, 2021 3:36 AM ETTyson Foods, Inc. (TSN)10 Comments


  • Tyson Foods have seen some longer-term undervaluation for its shares since the pandemic brought the price down from the low $90s way down to almost $50.
  • In the $50s, the company was one of the more buyable stocks in the entire sector.
  • However, appreciation and reversal of valuation have brought the company's price level back up to better levels. The upside is slimmer, and the yield is lower.
  • I consider Tyson to be barely "BUY"able today due to a combination of growth expectations and risks in the business. It could be a good option for some investors, however.
Chicken or hen on a green meadow.
Photo by Sonja Filitz/iStock via Getty Images

Me, I love chicken.

I grew rurally and close to farms, and always owned hens when I was younger. I love eggs, and I love chicken. It's extremely healthy and cheap protein, and it's extremely versatile.

Something being extremely cheap, somewhat

This article was written by

Wolf Report profile picture

Wolf Report is a senior analyst and private portfolio manager with over 10 years generating value ideas in European and North American markets.

He is a contributing author for the investing group iREIT on Alpha where in addition to the U.S. market, he covers the markets of Scandinavia, Germany, France, UK, Italy, Spain, Portugal and Eastern Europe in search of reasonably valued stock ideas. Learn more.

Analyst’s Disclosure: I am/we are long TSN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advice. It may be structured as such, but it is not financial advice. Investors are required and expected to do their own due diligence and research prior to any investment. Short-term trading, options trading/investment and futures trading are potentially extremely risky investment styles. They generally are not appropriate for someone with limited capital, limited investment experience, or a lack of understanding for the necessary risk tolerance involved. I own the European/Scandinavian tickers (not the ADRs) of all European/Scandinavian companies listed in my articles. Option Disclosure: May write PUT on TSN within 72 hours.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (10)

jillydavid profile picture
It’s coming back down to 70. Buyable again.
Calvin Ott profile picture
Nice article Wolf
expecting better chicken profits this years as prices are trending higher ... expecting chicken prices to rise disproportionately to rising feed costs

Beef margins are amazing right now ... as indicated by the USDA live/box spread ... however nothing like last year at this time when CVD problems disrupted processing

The pork spread is also pretty good as lean hog prices rise

overall expecting a great year for TSN and JBSAY as well
Token White Guy profile picture
Chicken on the grill.... For the price, does it really get any better than that?

It's like the skin was custom-made for grilling. Char it all you want and protect that tasty meat.

Glad I bought TSN in the $50s and advised the wife to do the same.

Long TSN.
craftbrewinfo profile picture
@Wolf Report thank for laying this out simply and clearly. EVERYTHING has shot up the last few months, TSN included. I have added some shares and it increased my cost basis to $69....That's been my dilemma.. I don't want to destroy my cost basis chasing these rallies, so I nibble here and there slowly... The fundimentals look good, the expansion into Asia looks good, and the increased exposure into the plant based looks good as well, but at the end of the day, meat is a commodity, so with that in mind, I proceed with caution. I should note I thought HRL was the be all/end all in the meats, but my position has gone no where. The valuation is high and the risk/reward not near a positive like that of TSN.....
love TSN but have same impression as author. holding. good inflation hedge but too rich to add more here. not in love with option spreads either, so . . . holding. good luck everyone.
Still about 20% undervalued....
Kruegermeister profile picture
Nice and thorough article, as usual. However did you factored in the class action that several law firms are putting on Tyson?
BM Cashflow Detective profile picture
Tyson Foods benefits from its brand strength, robust geographic reach and ability to produce locally in its international markets and to meet evolving global demand.

Tyson has robust retail demand and solid ecommerce sales. Tyson also continues to focus on increasing protein production to meet the growing demand for protein-rich foods. To that end, Tyson Foods has a rich portfolio of protein brands that are growing rapidly around the world.

Tyson is also running a number of operations and supply chain efficiency programs to better position itself over the long term. In addition, the company is constantly looking for ways to improve the cost structure as well as operational improvements and customer service.

Tyson is good value based on its 3-year forward PEG Ratio 1.10.

Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.

Tyson's relatively high pre-tax margin suggests tight control on operating costs versus peers.

This resulted in a TTM FCF margin of 14.49%, compared to the TTM FCF margin of 5.49% of the peer median.

I see Tyson mid-term at a fair value of $117. Tyson would therefore be a buy.

I'm long $TSN

Doubts of disbelief work like magnets,

but fortunately also positive prospects.
Angstfrei profile picture
It seems there are almost no seriously undervalued stocks left in the big caps area in the US. Most of your bargains like CVS, MO, TSN, ... are fairly valued now. Not excessively overvalued, but also no bargains anymore. Only very few left like LMT, NOC, BTI, BMY. Maybe we have to get used to forgetting about historically low 10y average PE comparisons. But my words might sound like „This time it‘s different“ and that would be bubble talk.
craftbrewinfo profile picture
@Sascha_DRS I agree fully. I have all three. Undervalued stocks are still out there, but all the ones on my portfolio are more fair valued. So that has been my shift in focus- still hunt for fundimentally sound undervalued stocks, but don't discount the fairly valued ones....
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