Tyson Foods, Inc. (TSN), Pilgrim’s Pride Corporation (PPC), Smithfield Foods, Inc. (SFD): Can This Meat Producer Offer Investors Safety?

Both stocks trade at similar valuations. While Pilgrim’s Pride Corporation (NASDAQ:PPC) turns more investor dollars into profits (ROE), Tyson Foods makes up for that by offering a dividend. One big difference between these two stocks is their historical performance. Tyson Foods has greatly outperformed Pilgrim’s Pride Corporation (NASDAQ:PPC) over the past decade.

Tyson Foods data by YCharts

Tyson Foods also proved to be more resilient when the market crashed — relatively speaking.

You might have noticed Smithfield Foods, Inc. (NYSE:SFD) in the chart above. Smithfield Foods, Inc. (NYSE:SFD) is waiting for regulatory and shareholder approval for its sale to Shuanghui, a privately owned meat-processing company. The deal is expected to close in the second quarter of next year, but there are concerns about Shuanghui’s food practices.

Since the deal was announced, Smithfield Foods, Inc. (NYSE:SFD)’ stock hasn’t gone anywhere. It’s possible for the deal to fall through, so downside risk outweighs upside potential. Even if you were looking at Smithfield Foods, Inc. (NYSE:SFD) on a fundamental basis, it trades at 27 times earnings (more expensive than peers), it sports a net margin of 1.4% (lower than peers), an ROE of 5.7% (once again, lower than peers), and it doesn’t pay a dividend.

Conclusion
If you don’t believe in paying attention to external economic events, then Tyson Foods is a clear winner. On the other hand, being that the stock is sensitive to broader market corrections, it can’t be recommended at this time. A missed opportunity is always better than a loss, and you might have an opportunity to pick up Tyson Foods, Inc. (NYSE:TSN)’ shares at cheaper prices down the road.

The article Can This Meat Producer Offer Investors Safety? originally appeared on Fool.com and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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