Earnings

Reliable Long-term Trend to Profit From: Tyson Foods, Inc. (TSN), Superior Energy Services, Inc. (SPN)

The shares of Tyson Foods, Inc. have decreased by more than -20.44% this year alone. The shares recently went down by -1.62% or -$1.06 and now trades at $64.50. The shares of Superior Energy Services, Inc. (NYSE:SPN), has jumped by 1.25% year to date as of 07/18/2018. The shares currently trade at $9.75 and have been able to report a change of -1.52% over the past one week.

The stock of Tyson Foods, Inc. and Superior Energy Services, Inc. were two of the most active stocks on Wednesday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. TSN has an EBITDA margin of 9.16%, this implies that the underlying business of TSN is more profitable. The ROI of TSN is 10.00% while that of SPN is -6.60%. These figures suggest that TSN ventures generate a higher ROI than that of SPN.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, TSN’s free cash flow per share is a negative -0.95, while that of SPN is also a negative -4.86.

Liquidity and Financial Risk



The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for TSN is 1.60 and that of SPN is 1.90. This implies that it is easier for TSN to cover its immediate obligations over the next 12 months than SPN. The debt ratio of TSN is 0.82 compared to 1.19 for SPN. SPN can be able to settle its long-term debts and thus is a lower financial risk than TSN.

Valuation

TSN currently trades at a forward P/E of 9.48, a P/B of 1.95, and a P/S of 0.59 while SPN trades at a P/B of 1.39, and a P/S of 0.78. This means that looking at the earnings, book values and sales basis, TSN is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions

The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of TSN is currently at a -19.18% to its one-year price target of 79.81. Looking at its rival pricing, SPN is at a -22.37% relative to its price target of 12.56.




When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), TSN is given a 2.20 while 2.40 placed for SPN. This means that analysts are more bullish on the outlook for SPN stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for TSN is 3.35 while that of SPN is just 4.40. This means that analysts are more bullish on the forecast for TSN stock.

Conclusion

The stock of Superior Energy Services, Inc. defeats that of Tyson Foods, Inc. when the two are compared, with SPN taking 5 out of the total factors that were been considered. SPN happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, SPN is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for SPN is better on when it is viewed on short interest.

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