Tyson Foods Inc (TSN)

Conclusion

Tyson Foods is a US food company with four segments, Beef, Pork, Chicken and Prepared Foods. It sells fresh and processed meat and prepared foods to grocery retailers, food service customers and export buyers. On 2026-11-09 the shares closed at 59.87 USD, giving a market capitalisation of 16.9 billion USD and an enterprise value of 24.1 billion USD.

The verdict is fair. The fair value band runs from 48.01 to 72.02 USD with a midpoint of 60.01 USD, and the margin of safety is 0.2% at the current price. The P/E of 29.4x compares with a ten-year median of 12.7x, a premium of 131.3%, while EV/EBITDA of 9.3x compares with a median of 8.4x, a premium of 10.9%. The DCF gives 68.54 USD per share at a discount rate of 8.9%, and the fair value from historical multiples is 51.48 USD. The reverse DCF implies growth of 2.4% a year, against revenue growth of 4.7% a year over five years.

What holds the case up is the balance sheet and the cash flow. The Altman Z-score of 3.09 sits in the safe zone, free cash flow conversion over the last twelve months is 202.3%, and the share count has fallen by 4.8% a year over five years. What would break it is the return on capital and the earnings trend. ROIC of 3.2% stands against a WACC of 7.1%, the operating margin of 2.3% compares with a ten-year median of 7.3%, and earnings per share have shrunk by 21.7% a year over five years. Analysts have also cut current-year estimates by 11.5% over 90 days.

Financial health

Financial strength is green, held up by a current ratio of 1.43 and an Altman Z-score of 3.09, and held back only by neutral readings on leverage and interest cover. The current ratio is 1.43 and the quick ratio is 0.48. Net debt to EBITDA is 2.79x, and debt to equity is 0.44. Interest coverage is 3.0x, and the company's interest expense is not separately reported, so this figure cannot be checked further. The Altman Z-score of 3.09 falls in the safe zone. The Altman model was built mainly for manufacturing firms, so it is a broad screen for a meat processor. Insolvency risk: low, about 0.4% by the estimate of the Ohlson model over one to two years. Debt has fallen by 9.6% a year over five years, which eases the leverage burden.

Earnings quality

Earnings quality is yellow. Cash generation is strong, with free cash flow at 202.3% of earnings over the last twelve months, though only 85.1% on a five-year average. The accrual ratio of -4.6% points to cash earnings that exceed reported profit. Stock-based compensation is 0.18% of revenue, and free cash flow after it is 1.06 billion USD. Piotroski score: 6 of 9. The Beneish M-score is not available. Seven of the last eight quarters beat expectations, with an average surprise of 17.6%. Against that, estimate revisions are negative: the current-year estimate has fallen 11.5% over 90 days with two downgrades and no upgrades in 30 days, and the next-year estimate has fallen 13.9%.

Profitability

Profitability is red. Every margin sits well below its ten-year median: gross margin 6.1% against 12.5%, operating margin 2.3% against 7.3%, and net margin 1.0% against 4.8%. Operating margin stability is 0.54. ROIC of 3.2% is below the WACC of 7.1%, a gap of -4.0% that the company's own figures flag as destroying value. The five-year median ROIC is 3.9%, which is also below WACC. The DuPont split for the latest fiscal year shows a net margin of 0.87%, asset turnover of 1.49 and an equity multiplier of 2.03. Return on equity of 3.2% therefore reflects a thin margin lifted by leverage, not strong operations.

Growth

Growth is yellow. Revenue compound growth is 0.7% over three years, 4.7% over five years and 2.8% over ten years. Revenue grew in eight of the last ten years. Earnings per share have fallen sharply: a compound decline of 46.8% over three years, 21.7% over five years and 5.6% over ten years. Free cash flow per share grew 14.8% a year over three years but fell 10.8% a year over five years. The growth picture is therefore mixed: sales have been broadly stable, while per-share profit has shrunk. The next-year earnings growth estimate of 8.6% is positive, but it comes after recent downward revisions.

Valuation

Valuation is yellow, with the verdict fair. The P/E of 29.4x is well above its ten-year median of 12.7x, a premium of 131.3%. EV/EBITDA of 9.3x is a premium of 10.9% over its median of 8.4x. Price to free cash flow of 14.5x is a premium of 18.2% over a median of 12.3x. Price to sales of 0.30x is a discount of 44.1% to its median of 0.54x, and price to book of 0.93x is a discount of 40.9% to its median of 1.58x. The DCF gives 68.54 USD per share at a discount rate of 8.9%, and the terminal value makes up 55.9% of that figure. The fair value band of 48.01 to 72.02 USD is built on fixed assumptions, including a 5% equity risk premium and capped growth. It is an order of magnitude, not a price target. The dividend yield is 4.2%, with a forward yield of 3.6% and a payout of 60.5% of free cash flow.

Risks

The weakest numbers would hit the company in different ways. A return on capital below its cost of capital means each dollar invested currently earns less than it costs, so profit growth depends on margin recovery. A 2.3% operating margin leaves little room for input cost swings in cattle, hogs or grain. Net debt of 2.79x EBITDA and interest cover of 3.0x would tighten if earnings fall further. Falling estimates could push the share price lower even if the fair value band holds. The Beneish M-score is not available. The analysis has no debt maturity schedule and no revenue split by segment, so it cannot show which parts of the business drive margin pressure or when debt must be refinanced.