Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Food Processing industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Food Processing Stock News

Before choosing which top Food Processing stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

Innovation in food processing technology and an upsurge in the demand for processed food are expected to drive the market over the next few years. Dietary shifts including increasingly prominent health-conscious diets in both developed and developing countries are also predicted to fuel growth. Despite the long-term growth outlook, supply chain struggles that began during the pandemic persist. To combat pressure on margins, many are raising prices of goods and ultimately are expected to have stronger margins at the end of the year. Additionally, it has been difficult to predict the availability of products. Due to this, many companies must act as their own suppliers and source their own goods. Food processors hope this will help them deal with demand better. Food-at-home demand is expected to remain permanently elevated versus pre-pandemic levels. Consumption volume will likely face some downward pressure in 2022 due to price increases and the re-opening of the broader economy, which tends to support food-away-from-home demand. New consumer habits and increased work-from-home adoption are expected to keep food-at-home demand strong. Fading stimulus benefits should allow private labels (i.e., store brands) to make a comeback in 2022 after losing market share over the past two years to branded products.

Why Focus on Undervalued Food Processing Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Food Processing Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Food Processing industry for Tuesday, January 09, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Food Processing industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Conagra Brands Inc’s Value Grade

Value Grade:

Conagra Brands, Inc. is a consumer packaged goods food company. The Company operates in various sectors of the food industry, with a focus on the sale of branded, private branded, and value-added consumer food, as well as foodservice items and ingredients. Its Grocery & Snacks segment principally includes branded, shelf-stable food products sold in various retail channels in the United States. Its Refrigerated & Frozen segment principally includes branded, temperature-controlled food products sold in various retail channels in the United States. Its International segment principally includes branded food products, in various temperature states, sold in various retail and foodservice channels outside of the United States. Its Foodservice segment includes branded and customized food products, including meals, entrees, sauces, and a variety of custom-manufactured culinary products packaged for sale to restaurants and other foodservice establishments, primarily in the United States.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Conagra Brands Inc has a Value Score of 61, which is considered to be undervalued.

When you look at Conagra Brands Inc’s price-to-sales ratio at 1.13 compared to the industry median at 0.95, this company has a higher price relative to revenue compared to its peers. This could make Conagra Brands Inc’s stock less attractive for value investors.

Conagra Brands Inc’s price-earnings ratio is 13.99 compared to the industry median at 20.86. This means it has a lower share price relative to earnings compared to its peers. This could make Conagra Brands Inc more attractive for value investors.

Now, let’s assess Conagra Brands Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 9.8, when compared to the industry median of 10.6, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Conagra Brands Inc’s shareholder yield is higher than its industry median ratio of 0.00%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Conagra Brands Inc’s price-to-book ratio is lower than its industry median ratio of 2.09. This could make Conagra Brands Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Conagra Brands Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Conagra Brands Inc’s price-to-free-cash-flow ratio is higher than its industry median ratio of 26.31. This could make Conagra Brands Inc fairly attractive because the higher P/FCF ratio indicates that Conagra Brands Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

NuZee Inc’s Value Grade

Value Grade:

NuZee, Inc. is a co-packing company for single serve coffee formats that partners with companies to help them develop within the single serve and private label coffee category. The Company's products include single serve pour over, coffee brew bag coffee products, and single serve coffee format, DRIPKIT pour over products. Its DRIPKIT pour over format features a large-size single serve pour over pack that sits on top of the cup and delivers to its customers in the United States, Canada and Mexico. The Company also sells NuZee branded single serve coffee products, including its flagship Coffee Blenders line of both single serve pour over coffee and coffee brew bag coffee products. Coffee Blenders also offers Coldpresso latte product line that is available to purchase in Korea and online. The Company sells its Twin Peaks single serve pour over coffee exclusively via Amazon.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

NuZee Inc has a Value Score of 62, which is considered to be undervalued.

NuZee Inc’s price-to-book ratio is higher than its peers. This could make NuZee Inc less attractive for value investors when compared to the industry median at 2.09.

You can read more about NuZee Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Oatly Group AB (publ) - ADR’s Value Grade

Value Grade:

Oatly Group AB, formerly known as Havre Global AB, is a Sweden-based oat drink company. The Company makes products such as ice cream, yogurt and spreads. The company operates worldwide.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Oatly Group AB (publ) - ADR has a Value Score of 64, which is considered to be undervalued.

Oatly Group AB (publ) - ADR’s price-to-book ratio is higher than its peers. This could make Oatly Group AB (publ) - ADR less attractive for value investors when compared to the industry median at 2.09.

You can read more about Oatly Group AB (publ) - ADR’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Food Processing Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Food Processing stocks as well as other industrys.

Choosing Which of the 3 Best Food Processing Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Conagra Brands Inc stock has a Value Grade of B.
• NuZee Inc stock has a Value Grade of B.
• Oatly Group AB (publ) - ADR stock has a Value Grade of B.

Now that you have a bit more background about each of the 3 undervalued stocks in the Food Processing industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Food Processing Stocks

Want to learn more about Food Processing stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Food Processing Stocks for Tuesday, January 09
• What You Need to Know About Archer-Daniels-Midland Co's Q3 Earnings
• What You Need to Know About B&G; Foods Inc's Q3 Earnings
• What You Need to Know About Bellring Brands Inc's Q4 Earnings

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