Is Tyson a Bargain After Industry Shifts Send Shares Down 13% in 2024?

• Wondering if Tyson Foods could be a value play that's flying under the radar? You are not alone, as many investors keep an eye on staples like Tyson to spot potential bargains.
• The stock has seen a bit of a rebound lately, climbing 2.5% over the past week and 2.2% over the last month. It's still down 13.2% over the past year.
• Recent headlines have centered around industry-wide shifts in protein demand and supply chain adaptation, which have fueled speculation about Tyson's market positioning. News of evolving consumer trends and cost management strategies is giving investors fresh context for the stock’s recent price movements.
• On our value checks, Tyson Foods scores 2 out of 6 for undervaluation. This is a decent start, but just part of the picture. To get a full view, we'll dig into the different ways to value Tyson and why traditional methods might only tell half the story.

Tyson Foods scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Tyson Foods Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates the value of a company by projecting its future cash flows and then discounting those amounts back to their value in today's dollars. This approach helps investors understand the company’s potential value if current expectations hold true.

For Tyson Foods, current Free Cash Flow stands at approximately $780 Million. Analyst forecasts and Simply Wall St projections suggest an upward trend, with Free Cash Flow expected to reach around $1.34 Billion by 2028. These ten-year projections are based on a combination of analyst estimates for the first five years, with extrapolated growth applied for the remaining period. All projections are presented in U.S. dollars.

Based on the 2 Stage Free Cash Flow to Equity model, the estimated intrinsic value for Tyson Foods is $92.58 per share. This suggests that the stock is currently trading at an implied discount of 41.7 percent compared to its calculated fair value.

If investors trust these projections and the model’s assumptions, Tyson Foods looks notably undervalued at current levels.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Tyson Foods is undervalued by 41.7%. Track this in your watchlist or portfolio, or discover 879 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Tyson Foods.

Approach 2: Tyson Foods Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used valuation tool for profitable companies because it directly connects the stock price with the company’s earnings power. For businesses like Tyson Foods with consistent profits, it offers an intuitive snapshot of how much investors are willing to pay today for a dollar of earnings.

It’s important to note that what counts as a “fair” PE ratio depends on the company’s growth outlook and risk profile. High-growth companies generally deserve a higher ratio, while more mature or riskier businesses warrant a lower one. Comparing a company’s PE to industry averages and key peers is a good starting point. However, by itself, it doesn’t capture the whole story.

Tyson Foods currently trades at a PE ratio of 40.21x, which is well above both the Food industry average of 17.76x and the peer average of 13.53x. Simply Wall St calculates a proprietary “Fair Ratio” for Tyson at 33.33x. This Fair Ratio goes beyond basic benchmarks by factoring in Tyson’s specific earnings growth potential, profit margins, size, industry dynamics, and risk considerations, offering a more tailored view than standard comparisons.

Since Tyson’s current PE is only modestly higher than its Fair Ratio and the difference is less than 0.10 in absolute value, the stock can be considered fairly valued by this measure.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1405 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Tyson Foods Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives.

A Narrative is simply the story behind your numbers, bringing together your own perspective, such as what you think Tyson Foods could earn, how fast it might grow, and what its fair value could be, into a clear investment thesis.

With Narratives, you are not just crunching numbers; you are connecting Tyson's latest business developments, long-term strategies, and shifting market conditions to forecasts and valuations that actually make sense to you.

Available right in the Simply Wall St Community page, Narratives are a powerful but easy-to-use tool trusted by millions of investors, empowering you to document your assumptions, see fair value and buy/sell signals in real time, and compare those to the current share price as news or earnings reports roll in.

Narratives automatically update with new information, keeping your analysis relevant and timely. If Tyson launches a major product, posts impressive margins, or faces industry headwinds, your view adapts without extra effort.

For example, some investors believe Tyson’s margin expansion and global protein demand can drive a fair value as high as $80, while others worry about persistent risks and set it closer to $55, demonstrating how your story and assumptions directly shape your investment decisions.

Do you think there's more to the story for Tyson Foods? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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