Insiders Are Buying These Food-Related Stocks: Tyson Foods, Inc. (TSN), Brinker International, Inc. (EAT)

Page 1 of 2

Insider trading has long been considered by many to be an important indicator of a company’s expected performance. An insider purchase might be a sign of good things to come for the stock. However, it is always essential to do due diligence and not base a buy or sell decision on insider activity alone, which is why in this post I will be analyzing in some detail three food-related stocks that have had recent insider buying activity.

Tyson Foods, Inc. (NYSE:TSN)

YUM! Brands, Inc. (NYSE:YUM): The company owns, operates and franchises quick-service restaurants, most notably KFC, Pizza Hut and Taco Bell. It also owns non-controlling interests in Chinese franchises.

  • On Feb. 6, Director Robert Walter bought 35,000 shares of the company, at $61.95/share (a total value of $2,168,086!). Another fellow insider, Director David Grissom exercised his option of buying 21,679 shares at $38.06 (for a total value of a little over $800,000). Finally, YUM’s SVP David Blum sold 3,242 shares, but, on the same day, exercised his option to buy 9,500 shares at a price of $29.61. Insider purchases on Feb. 6 were clearly significant.
  • In terms of valuation, YUM! trades at a current P/E of 18.70x, not a very low valuation. The future P/E is only marginally better at 17.81x.
  • The analyst price target average is $73.13, which implies that the stock could rise a further 12.35% from current levels. However, all 2013 analyst reports have given the stock a lower price target than said average. In fact, this year reports have an average price target in the mid-60s, which is the price at which the stock is trading currently. This could be a sign that Wall Street is turning neutral on the stock.
  • YUM! pays a dividend of $1.34/share, which works out to a yield of 2.11%. The company has been a consistent, regular dividend payer since 2004.
  • My take: While restaurants might suffer from fragile consumer confidence, weak sales momentum, a decline in capital spending, and higher food prices, YUM! is a conservative play in the the quick-service restaurant industry. The company has suffered from supply and PR issues in China’s KFC brand, but, once the storm passes, YUM! brands could return to growth in China, which, coupled with a relatively safe position domestically, should make the stock edge higher.

Tyson Foods, Inc. (NYSE:TSN): The company produces, distributes and markets chicken, beefs, pork, prepared foods and related products.

  • Three insider transactions occurred on Feb. 6. On one hand, Director Jim Kever bought 10,000 shares at $23.37/share, for a total value of $233,690. On the other, Sr Grp VP of Fresh Meats, Mr. Noel White sold 40,000 shares for $23.35, but on that same day, he exercised the option of buying 40,000 shares again at $15.37/share.
  • With regards to valuation, the stock has a current P/E of 14.19. The forward P/E is a more attractive 10.43.
  • The stock has an average price target of $23.82, which is at a very similar level to Friday’s closing price of $23.78. However, it is important to note that the most recent analyst ratings of the stock happened in 2011.
  • Tyson pays a small dividend of $0.20/share (that’s a yield of 0.84%). Tyson Foods has paid a dividend to its shareholders since 1987. Dividend yields, however, have always been relatively low.
  • My take: On paper, if the recent insider buying hadn’t occurred, this stock would not be very attractive: valuation is average, the dividend is low, and analysts are not very bullish on TSN. Furthermore, recent surges on corn and soybean prices could pressure earnings this year. However, the company is a well-run company in a relatively safe sector, and in fact it recently beat analyst estimates as fiscal first-quarter earnings jumped 11%. The company is also expanding by opening new plants in Florida, Tennessee, Texas, and Virginia, and seems poised to remain a leader in its sector. Tyson could actually be a smart choice if one were to invest in the American meat market.
Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!