A Tyson Board Member Is Bullish On Meats

A good peer group for Tyson would consist of Pilgrim’s Pride Corporation (NYSE:PPC), Smithfield Foods, Inc. (NYSE:SFD), Hormel Foods Corporation (NYSE:HRL), and BRF Brasil Foods SA (NYSE:BRFS). Tyson is the cheapest of these companies on a trailing basis. Smithfield and Hormel do have trailing earnings multiples of less than 20, but Smithfield’s business has been struggling recently; we’d note that company is more focused on pork products, which we’d mentioned earlier as weakening at Tyson as well. Hormel reported a 13% increase in earnings in its most recent fiscal quarter (which ended in October) versus a year earlier, however, and it might be worth investigating as well. Pilgrim’s Pride is up 61% in the last year as the market expects high growth, and analyst expectations are actually very strong implying a current-year P/E of only 10. It too would be attractive if it hits those earnings targets. Brasil Foods seems like it should be avoided, at least for now, as the company’s net income has been down and even the 2013 earnings multiple is more than 20.

One of the advantages of taking a brief look at stocks bought by insiders is that even a small amount of research can identify whether it and similar companies is actually a value prospect. In this case, we would say that Tyson, Hormel, and possibly Pilgrim’s Pride all qualify. While none is a buy based merely on the combination of valuation and recent growth, we think that any or all of the three could be investigated by a value investor.

Disclosure: I own no shares of any stocks mentioned in this article.