Investors with an interest in Food - Meat Products stocks have likely encountered both Tyson Foods (TSN) and Hormel Foods (HRL). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Tyson Foods and Hormel Foods are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that TSN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
TSN currently has a forward P/E ratio of 13.86, while HRL has a forward P/E of 30.73. We also note that TSN has a PEG ratio of 2.55. 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. HRL currently has a PEG ratio of 4.10.
Another notable valuation metric for TSN is its P/B ratio of 1.53. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, HRL has a P/B of 4.44.
These are just a few of the metrics contributing to TSN's Value grade of A and HRL's Value grade of C.
TSN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that TSN is likely the superior value option right now.
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Tyson Foods, Inc. (TSN): Free Stock Analysis Report
Hormel Foods Corporation (HRL): Free Stock Analysis Report
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