Tyson Has Failed to Carve Out a Competitive Edge, but Shares Modestly Undervalued
Though we believe that Tyson has failed to create a moat, given a lack of pricing power and scale-based cost advantage, we think the nearly 25% discount to our $67 fair value estimate affords a reasonable margin of safety. Tyson operates with a diverse mix of protein businesses--beef (20% of profit), chicken (35%), and pork (15%)--and packaged foods (30%), which offers more earnings stability than other meat processors.Tyson is the largest U.S. producer of beef and chicken, but several factors ...
Tyson Foods is a food company. The company's operations consist of breeding stock, contract farmers, feed production, processing, further-processing, marketing and transportation of chicken and related allied products, including animal and pet food ingredients. Through its wholly-owned subsidiary, Cobb-Vantress, Inc., the company is engaged as poultry breeding stock supplier. The company also processes live fed cattle and hogs and fabricates dressed beef and pork carcasses into primal and sub-primal meat cuts, case-ready beef and pork and fully-cooked meats. The company produces a range of fresh, frozen and refrigerated food products. The company operates in Beef, Pork, Chicken and Prepared Foods segments.
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Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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