Should Value Investors Buy Tyson Foods (TSN) Stock?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Tyson Foods (TSN). TSN is currently sporting a Zacks Rank #2 (Buy), as well as a Value grade of A.

Investors should also note that TSN holds a PEG ratio of 0.70. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TSN's PEG compares to its industry's average PEG of 1.60. TSN's PEG has been as high as 0.94 and as low as 0.30, with a median of 0.72, all within the past year.

We should also highlight that TSN has a P/B ratio of 1.03. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. TSN's current P/B looks attractive when compared to its industry's average P/B of 1.52. Within the past 52 weeks, TSN's P/B has been as high as 1.24 and as low as 1.01, with a median of 1.11.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. TSN has a P/S ratio of 0.41. This compares to its industry's average P/S of 0.67.

Finally, our model also underscores that TSN has a P/CF ratio of 7.77. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 9.55. Within the past 12 months, TSN's P/CF has been as high as 12.12 and as low as 7.59, with a median of 8.75.

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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This article originally published on Zacks Investment Research (zacks.com).

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