Intrinsic value of Tyson Foods Cl A - TSN

Previous Close

$62.72

  Intrinsic Value

$50.92

stock screener

  Rating & Target

hold

-19%

  Value-price divergence*

-56%

Previous close

$62.72

 
Intrinsic value

$50.92

 
Up/down potential

-19%

 
Rating

hold

 
Value-price divergence*

-56%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of TSN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 22.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -10.86
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  36,881
  37,619
  38,484
  39,473
  40,583
  41,814
  43,164
  44,634
  46,225
  47,939
  49,779
  51,747
  53,847
  56,083
  58,460
  60,982
  63,654
  66,483
  69,475
  72,635
  75,973
  79,494
  83,208
  87,123
  91,247
  95,591
  100,165
  104,979
  110,045
  115,374
  120,980
Variable operating expenses, $m
 
  35,649
  36,454
  37,373
  38,406
  39,550
  40,805
  42,172
  43,652
  45,246
  46,957
  48,121
  50,074
  52,153
  54,363
  56,708
  59,193
  61,824
  64,606
  67,545
  70,648
  73,923
  77,377
  81,017
  84,852
  88,892
  93,145
  97,622
  102,333
  107,289
  112,501
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  34,048
  35,649
  36,454
  37,373
  38,406
  39,550
  40,805
  42,172
  43,652
  45,246
  46,957
  48,121
  50,074
  52,153
  54,363
  56,708
  59,193
  61,824
  64,606
  67,545
  70,648
  73,923
  77,377
  81,017
  84,852
  88,892
  93,145
  97,622
  102,333
  107,289
  112,501
Operating income, $m
  2,833
  1,970
  2,030
  2,099
  2,177
  2,264
  2,358
  2,461
  2,573
  2,693
  2,822
  3,627
  3,774
  3,930
  4,097
  4,274
  4,461
  4,659
  4,869
  5,090
  5,324
  5,571
  5,831
  6,106
  6,395
  6,699
  7,020
  7,357
  7,712
  8,086
  8,479
EBITDA, $m
  3,538
  3,072
  3,143
  3,223
  3,314
  3,414
  3,525
  3,645
  3,775
  3,915
  4,065
  4,226
  4,397
  4,580
  4,774
  4,980
  5,198
  5,429
  5,673
  5,931
  6,204
  6,491
  6,795
  7,114
  7,451
  7,806
  8,179
  8,573
  8,986
  9,421
  9,879
Interest expense (income), $m
  242
  229
  239
  250
  262
  276
  292
  309
  328
  348
  370
  393
  418
  445
  474
  504
  536
  570
  606
  644
  684
  727
  771
  819
  869
  921
  976
  1,034
  1,096
  1,160
  1,228
Earnings before tax, $m
  2,598
  1,740
  1,791
  1,850
  1,915
  1,987
  2,066
  2,152
  2,245
  2,345
  2,452
  3,233
  3,355
  3,485
  3,623
  3,770
  3,925
  4,089
  4,263
  4,446
  4,640
  4,845
  5,060
  5,287
  5,526
  5,778
  6,044
  6,323
  6,616
  6,926
  7,251
Tax expense, $m
  826
  470
  484
  499
  517
  537
  558
  581
  606
  633
  662
  873
  906
  941
  978
  1,018
  1,060
  1,104
  1,151
  1,201
  1,253
  1,308
  1,366
  1,428
  1,492
  1,560
  1,632
  1,707
  1,786
  1,870
  1,958
Net income, $m
  1,768
  1,270
  1,308
  1,350
  1,398
  1,451
  1,508
  1,571
  1,639
  1,712
  1,790
  2,360
  2,449
  2,544
  2,645
  2,752
  2,865
  2,985
  3,112
  3,246
  3,387
  3,536
  3,694
  3,860
  4,034
  4,218
  4,412
  4,616
  4,830
  5,056
  5,293

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  349
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  22,373
  22,459
  22,975
  23,566
  24,229
  24,963
  25,769
  26,647
  27,597
  28,620
  29,719
  30,894
  32,148
  33,483
  34,901
  36,407
  38,002
  39,691
  41,477
  43,364
  45,357
  47,459
  49,677
  52,014
  54,476
  57,069
  59,800
  62,674
  65,698
  68,880
  72,227
Adjusted assets (=assets-cash), $m
  22,024
  22,459
  22,975
  23,566
  24,229
  24,963
  25,769
  26,647
  27,597
  28,620
  29,719
  30,894
  32,148
  33,483
  34,901
  36,407
  38,002
  39,691
  41,477
  43,364
  45,357
  47,459
  49,677
  52,014
  54,476
  57,069
  59,800
  62,674
  65,698
  68,880
  72,227
Revenue / Adjusted assets
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
  1.675
Average production assets, $m
  10,299
  10,496
  10,737
  11,013
  11,323
  11,666
  12,043
  12,453
  12,897
  13,375
  13,888
  14,437
  15,023
  15,647
  16,310
  17,014
  17,760
  18,549
  19,383
  20,265
  21,196
  22,179
  23,215
  24,307
  25,458
  26,670
  27,946
  29,289
  30,703
  32,189
  33,753
Working capital, $m
  2,126
  1,881
  1,924
  1,974
  2,029
  2,091
  2,158
  2,232
  2,311
  2,397
  2,489
  2,587
  2,692
  2,804
  2,923
  3,049
  3,183
  3,324
  3,474
  3,632
  3,799
  3,975
  4,160
  4,356
  4,562
  4,780
  5,008
  5,249
  5,502
  5,769
  6,049
Total debt, $m
  6,279
  6,450
  6,748
  7,088
  7,470
  7,893
  8,357
  8,863
  9,410
  9,999
  10,632
  11,309
  12,031
  12,800
  13,617
  14,484
  15,403
  16,376
  17,405
  18,492
  19,640
  20,851
  22,128
  23,474
  24,892
  26,386
  27,959
  29,614
  31,356
  33,189
  35,117
Total liabilities, $m
  12,765
  12,936
  13,234
  13,574
  13,956
  14,379
  14,843
  15,349
  15,896
  16,485
  17,118
  17,795
  18,517
  19,286
  20,103
  20,970
  21,889
  22,862
  23,891
  24,978
  26,126
  27,337
  28,614
  29,960
  31,378
  32,872
  34,445
  36,100
  37,842
  39,675
  41,603
Total equity, $m
  9,608
  9,523
  9,742
  9,992
  10,273
  10,584
  10,926
  11,298
  11,701
  12,135
  12,601
  13,099
  13,631
  14,197
  14,798
  15,437
  16,113
  16,829
  17,586
  18,387
  19,231
  20,123
  21,063
  22,054
  23,098
  24,197
  25,355
  26,574
  27,856
  29,205
  30,624
Total liabilities and equity, $m
  22,373
  22,459
  22,976
  23,566
  24,229
  24,963
  25,769
  26,647
  27,597
  28,620
  29,719
  30,894
  32,148
  33,483
  34,901
  36,407
  38,002
  39,691
  41,477
  43,365
  45,357
  47,460
  49,677
  52,014
  54,476
  57,069
  59,800
  62,674
  65,698
  68,880
  72,227
Debt-to-equity ratio
  0.654
  0.680
  0.690
  0.710
  0.730
  0.750
  0.760
  0.780
  0.800
  0.820
  0.840
  0.860
  0.880
  0.900
  0.920
  0.940
  0.960
  0.970
  0.990
  1.010
  1.020
  1.040
  1.050
  1.060
  1.080
  1.090
  1.100
  1.110
  1.130
  1.140
  1.150
Adjusted equity ratio
  0.420
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424
  0.424

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,768
  1,270
  1,308
  1,350
  1,398
  1,451
  1,508
  1,571
  1,639
  1,712
  1,790
  2,360
  2,449
  2,544
  2,645
  2,752
  2,865
  2,985
  3,112
  3,246
  3,387
  3,536
  3,694
  3,860
  4,034
  4,218
  4,412
  4,616
  4,830
  5,056
  5,293
Depreciation, amort., depletion, $m
  705
  1,102
  1,112
  1,124
  1,137
  1,151
  1,167
  1,184
  1,202
  1,222
  1,243
  599
  623
  649
  677
  706
  737
  770
  804
  841
  880
  920
  963
  1,009
  1,056
  1,107
  1,160
  1,215
  1,274
  1,336
  1,401
Funds from operations, $m
  2,779
  2,373
  2,420
  2,474
  2,535
  2,602
  2,675
  2,755
  2,841
  2,933
  3,033
  2,959
  3,073
  3,194
  3,322
  3,458
  3,602
  3,755
  3,916
  4,087
  4,267
  4,457
  4,657
  4,868
  5,091
  5,325
  5,571
  5,831
  6,104
  6,391
  6,693
Change in working capital, $m
  63
  37
  43
  49
  56
  62
  67
  74
  80
  86
  92
  98
  105
  112
  119
  126
  134
  141
  150
  158
  167
  176
  186
  196
  206
  217
  229
  241
  253
  266
  280
Cash from operations, $m
  2,716
  2,336
  2,377
  2,425
  2,479
  2,540
  2,607
  2,681
  2,761
  2,848
  2,941
  2,861
  2,968
  3,082
  3,203
  3,332
  3,469
  3,613
  3,767
  3,929
  4,100
  4,281
  4,471
  4,672
  4,884
  5,108
  5,343
  5,590
  5,851
  6,125
  6,413
Maintenance CAPEX, $m
  0
  -427
  -436
  -446
  -457
  -470
  -484
  -500
  -517
  -535
  -555
  -576
  -599
  -623
  -649
  -677
  -706
  -737
  -770
  -804
  -841
  -880
  -920
  -963
  -1,009
  -1,056
  -1,107
  -1,160
  -1,215
  -1,274
  -1,336
New CAPEX, $m
  -695
  -197
  -241
  -276
  -310
  -343
  -377
  -410
  -444
  -478
  -513
  -549
  -586
  -624
  -663
  -704
  -746
  -789
  -835
  -882
  -931
  -983
  -1,036
  -1,092
  -1,151
  -1,212
  -1,276
  -1,343
  -1,413
  -1,487
  -1,564
Cash from investing activities, $m
  -684
  -624
  -677
  -722
  -767
  -813
  -861
  -910
  -961
  -1,013
  -1,068
  -1,125
  -1,185
  -1,247
  -1,312
  -1,381
  -1,452
  -1,526
  -1,605
  -1,686
  -1,772
  -1,863
  -1,956
  -2,055
  -2,160
  -2,268
  -2,383
  -2,503
  -2,628
  -2,761
  -2,900
Free cash flow, $m
  2,032
  1,712
  1,700
  1,703
  1,712
  1,727
  1,747
  1,771
  1,800
  1,834
  1,873
  1,735
  1,783
  1,834
  1,891
  1,952
  2,017
  2,087
  2,162
  2,243
  2,328
  2,419
  2,515
  2,617
  2,725
  2,839
  2,960
  3,087
  3,222
  3,364
  3,514
Issuance/(repayment) of debt, $m
  -413
  250
  298
  340
  382
  423
  464
  506
  547
  590
  633
  677
  722
  769
  817
  867
  919
  973
  1,029
  1,087
  1,148
  1,211
  1,277
  1,346
  1,418
  1,494
  1,573
  1,655
  1,742
  1,833
  1,928
Issuance/(repurchase) of shares, $m
  -1,816
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -2,161
  250
  298
  340
  382
  423
  464
  506
  547
  590
  633
  677
  722
  769
  817
  867
  919
  973
  1,029
  1,087
  1,148
  1,211
  1,277
  1,346
  1,418
  1,494
  1,573
  1,655
  1,742
  1,833
  1,928
Total cash flow (excl. dividends), $m
  -123
  1,962
  1,998
  2,043
  2,094
  2,150
  2,211
  2,277
  2,348
  2,424
  2,505
  2,412
  2,505
  2,603
  2,708
  2,819
  2,936
  3,060
  3,191
  3,330
  3,476
  3,630
  3,792
  3,963
  4,143
  4,333
  4,533
  4,743
  4,964
  5,197
  5,441
Retained Cash Flow (-), $m
  83
  -185
  -219
  -250
  -281
  -311
  -342
  -372
  -403
  -434
  -466
  -498
  -532
  -566
  -602
  -638
  -676
  -716
  -757
  -800
  -845
  -891
  -940
  -991
  -1,044
  -1,100
  -1,158
  -1,219
  -1,282
  -1,349
  -1,419
Prev. year cash balance distribution, $m
 
  270
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,048
  1,779
  1,793
  1,813
  1,839
  1,869
  1,905
  1,945
  1,990
  2,040
  1,914
  1,973
  2,037
  2,106
  2,180
  2,260
  2,344
  2,434
  2,529
  2,631
  2,738
  2,852
  2,972
  3,099
  3,233
  3,375
  3,524
  3,682
  3,848
  4,022
Discount rate, %
 
  5.50
  5.78
  6.06
  6.37
  6.69
  7.02
  7.37
  7.74
  8.13
  8.53
  8.96
  9.41
  9.88
  10.37
  10.89
  11.43
  12.01
  12.61
  13.24
  13.90
  14.59
  15.32
  16.09
  16.89
  17.74
  18.62
  19.56
  20.53
  21.56
  22.64
PV of cash for distribution, $m
 
  1,941
  1,590
  1,503
  1,416
  1,330
  1,244
  1,158
  1,071
  985
  899
  745
  671
  599
  529
  463
  400
  341
  287
  238
  195
  157
  124
  96
  73
  55
  40
  28
  20
  13
  9
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Tyson Foods, Inc., together with its subsidiaries, operates as a food company worldwide. It operates through four segments: Chicken, Beef, Pork, and Prepared Foods. The company raises and processes chickens into fresh, frozen, and value-added chicken products; processes live fed cattle and live market hogs; and fabricates dressed beef and pork carcasses into primal and sub-primal meat cuts, as well as case ready beef and pork, and fully-cooked meats. It also supplies poultry breeding stock; sells allied products, such as hide and meats; and manufactures and markets frozen and refrigerated food products, including pepperoni, bacon, breakfast sausage, turkey, lunchmeat, hot dogs, pizza crusts and toppings, flour and corn tortilla products, desserts, appetizers, snacks, prepared meals, ethnic foods, soups, sauces, side dishes, meat dishes, breadsticks, and processed meats. Tyson Foods, Inc. offers its products primarily under the Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Van's, Sara Lee, Chef Pierre, Wright, Aidells, State Fair, Gallo Salame, and Golden Island brands. The company sells its products through its sales staff to grocery retailers, grocery wholesalers, meat distributors, warehouse club stores, military commissaries, industrial food processing companies, chain restaurants or their distributors, live markets, international export companies, and domestic distributors, as well as through independent brokers and trading companies. Tyson Foods, Inc. was founded in 1935 and is headquartered in Springdale, Arkansas.

FINANCIAL RATIOS  of  Tyson Foods Cl A (TSN)

Valuation Ratios
P/E Ratio 12.8
Price to Sales 0.6
Price to Book 2.4
Price to Tangible Book
Price to Cash Flow 8.3
Price to Free Cash Flow 11.2
Growth Rates
Sales Growth Rate -10.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -18.6%
Cap. Spend. - 3 Yr. Gr. Rate 4.5%
Financial Strength
Quick Ratio 4
Current Ratio 0.1
LT Debt to Equity 64.5%
Total Debt to Equity 65.4%
Interest Coverage 12
Management Effectiveness
Return On Assets 8.5%
Ret/ On Assets - 3 Yr. Avg. 6.6%
Return On Total Capital 10.9%
Ret/ On T. Cap. - 3 Yr. Avg. 8.3%
Return On Equity 18.3%
Return On Equity - 3 Yr. Avg. 14.3%
Asset Turnover 1.6
Profitability Ratios
Gross Margin 12.7%
Gross Margin - 3 Yr. Avg. 9.8%
EBITDA Margin 9.6%
EBITDA Margin - 3 Yr. Avg. 7.3%
Operating Margin 7.7%
Oper. Margin - 3 Yr. Avg. 5.6%
Pre-Tax Margin 7%
Pre-Tax Margin - 3 Yr. Avg. 5%
Net Profit Margin 4.8%
Net Profit Margin - 3 Yr. Avg. 3.3%
Effective Tax Rate 31.8%
Eff/ Tax Rate - 3 Yr. Avg. 33.2%
Payout Ratio 12.2%

TSN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TSN stock intrinsic value calculation we used $36881 million for the last fiscal year's total revenue generated by Tyson Foods Cl A. The default revenue input number comes from 2016 income statement of Tyson Foods Cl A. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TSN stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.5%, whose default value for TSN is calculated based on our internal credit rating of Tyson Foods Cl A, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Tyson Foods Cl A.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TSN stock the variable cost ratio is equal to 94.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for TSN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.7% for Tyson Foods Cl A.

Corporate tax rate of 27% is the nominal tax rate for Tyson Foods Cl A. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TSN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TSN are equal to 27.9%.

Life of production assets of 24.1 years is the average useful life of capital assets used in Tyson Foods Cl A operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TSN is equal to 5%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $9608 million for Tyson Foods Cl A - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 358.1 million for Tyson Foods Cl A is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Tyson Foods Cl A at the current share price and the inputted number of shares is $22.5 billion.

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COMPANY NEWS

▶ Bull or Bear: 5 Stocks With Rising Dividends   [Jul-26-17 06:00AM  Investopedia]
▶ ETFs with exposure to Tyson Foods, Inc. : July 25, 2017   [Jul-25-17 01:46PM  Capital Cube]
▶ Netflix: 'We Are Replacing Linear TV'   [Jul-17-17 05:00PM  TheStreet.com]
▶ ETFs with exposure to Tyson Foods, Inc. : July 14, 2017   [Jul-14-17 05:14PM  Capital Cube]
▶ Top Ranked Value Stocks to Buy for July 11th   [Jul-11-17 09:51AM  Zacks]
▶ Tyson Foods defeats Ball Park hot dog legal appeal   [Jul-06-17 12:46PM  Reuters]
▶ 3 Bargain Stocks You Can Buy Right Now   [Jun-30-17 07:45AM  Motley Fool]
▶ Lobbyist wounded in GOP baseball shooting leaves hospital   [Jun-23-17 09:17PM  Associated Press]
▶ Business Highlights   [05:50PM  Associated Press]
▶ Scalise has more surgery as authorities track shooter's path   [Jun-15-17 11:03PM  Associated Press]
▶ The Latest: Trump sits by wounded Scalise's bedside   [Jun-14-17 10:18PM  Associated Press]
▶ Hewlett Packard Enterprise CIO Named Tech Chief at Tyson Foods   [Jun-13-17 02:52PM  The Wall Street Journal]
▶ Tyson Recalls 2.5 Million Pounds of Chicken   [Jun-12-17 07:31PM  Investopedia]
▶ Greater Cincinnati company recalls chicken products   [06:34AM  American City Business Journals]
▶ Tyson Foods Stock Gets 'Buy' Rating at Mizuho   [Jun-08-17 10:18AM  TheStreet.com]
▶ Tyson Foods: Here's the Beef   [Jun-06-17 03:48PM  Barrons.com]
▶ Pork producer The Maschhoffs names COO   [May-24-17 01:10PM  American City Business Journals]
▶ How Tyson Foods Margins Fared in Fiscal 2Q17   [07:37AM  Market Realist]
▶ Bulls Get Airborne With Tech: Zacks Strategy   [May-11-17 04:08PM  Zacks]
▶ Why Tyson Foods Fiscal 2Q17 EPS Disappointed   [01:35PM  Market Realist]
▶ Why Tyson Took a Nosedive This Week   [May-09-17 11:23PM  Investopedia]
▶ Company News for May 09, 2017   [10:06AM  Zacks]
▶ Asian shares mixed as China tightens market oversight   [May-08-17 11:13PM  Associated Press]
Stock chart of TSN Financial statements of TSN Annual reports of TSN
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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