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Are Investors Undervaluing Tyson Foods (TSN) Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Tyson Foods (TSN). TSN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 9.91, while its industry has an average P/E of 17.60. Over the past year, TSN's Forward P/E has been as high as 13.66 and as low as 6.76, with a median of 11.82.

TSN is also sporting a PEG ratio of 2.21. 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 2.41. Within the past year, TSN's PEG has been as high as 3.36 and as low as 0.81, with a median of 1.42.

Investors should also recognize that TSN has a P/B ratio of 1.39. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.55. Over the past year, TSN's P/B has been as high as 2.35 and as low as 1.11, with a median of 1.55.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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 0.49. This compares to its industry's average P/S of 0.63.

Finally, we should also recognize that TSN has a P/CF ratio of 6.99. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. TSN's current P/CF looks attractive when compared to its industry's average P/CF of 13.38. Within the past 12 months, TSN's P/CF has been as high as 10.84 and as low as 5.12, with a median of 7.52.

Value investors will likely look at more than just these metrics, but the above data helps show that Tyson Foods is likely undervalued currently. And when considering the strength of its earnings outlook, TSN sticks out at as one of the market's strongest value stocks.


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