TSN Stock Report

2-Year Price History

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Ockham's Rating

TSN Revenue

As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, TSN the high and low end of the Price to Sales per share ratios are 0.27x and 0.16x respectively.

Notice that TSN's current Price to Sales per share ratio is 0.16x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $12.85, TSN is 28% below where we would expect to see it. This will beneficially factor into our final analysis of TSN as it is not often that this stock sinks to these levels.

TSN Cash Earnings

Looking at TSN specifically in their Cash Earnings capabilities, Ockham views TSN as significantly above their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for TSN, the current level of Cash Earnings compared to its historical levels helps identify where TSN is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 10.85 and a historical low Cash Earnings per share ratio of 6.70, an investor can relate where value becomes optimal.

Just recall that when a stock's price, as in the cases of TSN, is significantly elevated to the level of Cash Earnings being generated, the market has already priced in much of that value. For example, the historical average for TSN's Price to Cash Earnings ratio is 68% below the current ratio of 14.77. That is not an insignificant amount, and diminishes our overall outlook on TSN. However, you need to review several areas of a company's potential, and as management would point out, one metric is not the end-all-be-all of any analysis.

TSN Dividends

When determining a company's future prospects for success, Ockham Research sees analysis of dividend payments as a key additional factor. Even though it isn't imperative for TSN to shell out a dividend in order to receive a positive rating, it can be helpful to further our analysis.

The estimated annual dividend for TSN is $0.16 producing a current dividend yield of 1.25%. Much like our evaluation of Sales and Cash Earnings per share, we review dividend yields from TSN against the historic high and low levels over all available dividend history. Because dividends are a decision made exclusively by management, we view a healthy and rising dividend as a sign of confidence and strength. The highest dividend yield from TSN over previous years was 3.64% while the lowest dividend yield was 0.66%. With that range in mind, TSN’s current dividend yield is a full 41.86% below its median dividend yield historically. This is a negative from our perspective.