Tyson Foods giant has its stock sitting well below the average price to earnings ratio that the rest of the general market is trading at. This may be a solid opportunity to take a bite into a great company and watch the stock move higher.
The successful prediction of Tyson Foods
stock price could yield a significant profit to investors. But is it possible? The efficient-market hypothesis suggests that all published
stock prices of traded companies, such as Tyson Foods, already reflect all publicly available information. This academic statement is a fundamental principle of many financial and investing theories used today. However, the typical investor usually disagrees with a 'textbook' version of this hypothesis and continually tries to find mispriced stocks to increase returns. We use internally-developed statistical techniques to arrive at
the intrinsic value of Tyson Foods based on Tyson Foods hews, social hype, general headline patterns, and widely used
predictive technical indicators. We also calculate exposure to Tyson Foods's
market risk, different
technical and
fundamental indicators, relevant financial multiples and ratios, and then
comparing them to Tyson Foods's related companies.
Use Technical Analysis to project Tyson expected Price
Tyson Foods technical stock analysis exercises models and trading practices based on price and volume transformations, such as the moving averages, relative strength index, regressions, price and return correlations, business cycles, stock market cycles, or different charting patterns.
A focus of Tyson Foods technical analysis is to determine if market prices reflect all relevant information impacting that market. A technical analyst looks at the history of Tyson Foods trading pattern rather than external drivers such as economic, fundamental, or social events. It is believed that price action tends to repeat itself due to investors' collective, patterned behavior. Hence technical analysis focuses on identifiable price trends and conditions.
More Info...Tyson Foods Gross Profit
Tyson Foods Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Tyson Foods previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Tyson Foods Gross Profit growth over the last 10 years. Please check Tyson Foods'
gross profit and other
fundamental indicators for more details.
Another Deeper Perspective
Tyson Foods (TSN) is the processor of chicken, beef, pork as well as other food products. Most of us in one way or another have purchased their products as they are in nearly every supermarket in America.
One of the things that caught my eye was the company’s ability to return nearly 19% on equity. And, their margins on that equity was approximately 5%. I looked heavily at these variables and asked where that would put the company with their earnings and stock price going forward.
First, here are the earnings over the past several years:
2011: $1.61
2012: $2.26
2013: $2.48
2014: $3.01
2015: $4.59
The company has been diligent, and successful, at bringing in continually increasing earnings over the past several years. However, the final quarter of 2016 there was a drop in earnings, but overall the outlook going forward is continued increases on a year-over-year basis.
The 2016 earnings are looking to increase to roughly $5.50 per share. But, the company’s stock is trading at just below $60.00 per share. That puts the company at the threshold at about the price-to-earnings level that I am always looking at to trigger me taking a microscope to their financial numbers.
But, as I mentioned, I looked at the return-on-equity that caught my eye. 18% is a pretty good number, albeit, Tyson does not even come close to having a monopoly on return variables. Still, given their return and the average return for their margins at 5% several sources are projecting revenues at levels that would put 2017’s numbers well above 10-times earnings and increases that are above the 5% that I usually look for.
These variables put Tyson on my watch list and they should do the same for you. There are economic fundamentals that make this a good investment. First, the advances in the U.S. economy make it so that families will likely start to earn a lot more over the coming years. Statistics show that usually, one of the first things you do when your earnings improve is you purchase higher priced food items. Tyson does a lot of processed foods but they also do a lot of raw meats such as beef and pork. Chicken is considered the food item that the lowest income levels consume the most simply because it is a meat item and it is the cheapest. Beef is the most expensive. Families will begin switching away from chicken products into beef products. And, that is where Tyson will be able to take advantage of its return on capital and revenue returns.
Tyson has a number of labels that it operates that will be able to profit nicely with the shift that is underway in America’s homes. These labels are staples and well known throughout the country. Increased advertising should be able to help the company to capture these moves and profit from them.
Tyson is a great company based on what it owns and produces. And, given its strategic advantage in the food world as well as distribution network, it is well positioned to be very profitable in the future. Putting this company into your watch list would be a wise move. They are trading at nearly 12-times earnings and are likely to see a sizable increase in its revenue, and earnings. The market is offering this stock at a reduced price now and will likely offer the stock at an even better price once the inauguration is over with and the business of business gets on. You would want to hold on to this stock for a very long term holding.
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David Taylor is a Senior Member of Macroaxis Editorial Board - Sector Analysis. David is a professional writer who writes for multiple investment news outlets. His primary focus is dynamic movements in financial markets and effects of economic volatility on North American industries and sectors. David has many years of experience in financial service industry including working with major banks as a FX trader. In his free time, he does a lot of outdoors type activities including rock climbing, mountain biking, hiking, mountaineering and kayaking in the summer, and snowboarding in the winter.
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