Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 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.

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.

Click the button below to learn more about A+ Investor and subscribe today.

4 Undervalued Food Processing Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Food Processing industry for Tuesday, May 14, 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.

BRF SA (ADR)’s Value Grade

Value Grade:

BRF S.A. is a multinational Brazilian company that owns a diverse portfolio of products and is a producer of foods. The Company's segments include Brazil, Latin America (LATAM), Middle East and North of Africa (MENA), Africa and Other Segments. These segments include sales of all distribution channels and operations subdivided in to poultry, pork and other, processed, and other sales. The poultry operations include the production and sale of whole poultry and in-natura cuts. The pork and other operations involve the production and sale of in-natura cuts. The processed operations include the production and sale of processed foods, frozen and processed products derived from poultry, pork and beef, margarine, vegetable and soybean-based products. The other sales operations include the commercialization of flour for food service and others. Other segments include sale of in-natura beef cuts, agricultural products and animal feed.

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.

BRF SA (ADR) has a Value Score of 61, which is considered to be undervalued.

When you look at BRF SA (ADR)’s price-to-sales ratio at 0.57 compared to the industry median at 0.94, this company has a lower price relative to revenue compared to its peers. This could make BRF SA (ADR)’s stock more attractive for value investors.

Now, let’s assess BRF SA (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 7.5, when compared to the industry median of 11.2, 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. BRF SA (ADR)’s shareholder yield is lower 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. BRF SA (ADR)’s price-to-book ratio is higher than its industry median ratio of 2.00. This could make BRF SA (ADR) fairly attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at BRF SA (ADR)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. BRF SA (ADR)’s price-to-free-cash-flow ratio is lower than its industry median ratio of 21.62. This could make BRF SA (ADR) more attractive because the lower P/FCF ratio indicates that BRF SA (ADR) 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.

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 64, which is considered to be undervalued.

Conagra Brands Inc’s price-earnings ratio is 15.6 compared to the industry median at 18.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Conagra Brands Inc more attractive for value investors.

Conagra Brands Inc’s price-to-book ratio is higher than its peers. This could make Conagra Brands Inc less attractive for value investors when compared to the industry median at 2.00.

You can read more about Conagra Brands 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.

Whole Earth Brands Inc’s Value Grade

Value Grade:

Whole Earth Brands, Inc. is a global food company. The Company is enabling healthier lifestyles and providing access to quality plant-based sweeteners, flavor enhancers and other foods through its diverse portfolio of trusted brands and delicious products. The Company operates through two segments: Branded CPG and Flavors & Ingredients. The Branded CPG segment is comprised of its Merisant division of operating companies, Wholesome and Swerve. The Branded CPG products are sold under both its flagship brands, as well as local and private label brands. Its global flagship brands include Whole Earth, Pure Via, Wholesome, Swerve, Canderel, Equal and existing branded adjacencies. The Flavors & Ingredients segment products provide a variety of solutions for its customers, including flavor enhancement, flavor / aftertaste masking, moisturizing, product mouthfeel modification and skin soothing characteristics. Its Flavors & Ingredients segment operates its licorice-derived products business.

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.

Whole Earth Brands Inc has a Value Score of 70, which is considered to be undervalued.

Whole Earth Brands Inc’s price-to-book ratio is higher than its peers. This could make Whole Earth Brands Inc less attractive for value investors when compared to the industry median at 2.00.

You can read more about Whole Earth Brands 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.

Herbalife Ltd’s Value Grade

Value Grade:

Herbalife Ltd. is a global nutrition company. The Company sells weight management; targeted nutrition; energy, sports and fitness; and other nutrition products to and through a network of independent members (Members). Its products include meal replacements, protein shakes, teas, aloes, high-protein snacks, vitamins and supplements, sports nutrition and outer nutrition products. The Company offers a range of meal replacement products, such as protein shakes, bars and soups. Its snack portfolio includes a variety of sweet, savory and creamy options, such as high protein iced coffee, protein bars, snack shakes, soups, baking mixes and others. Its Herbal Aloe Concentrate is a beverage formulated with aloe vera, which can be mixed with water, tea or protein shake. It has also developed a portfolio of dietary supplements, encompassing solutions for heart health, digestive health, immunity and others. It sells products in 95 markets across the world.

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.

Herbalife Ltd has a Value Score of 93, which is considered to be undervalued.

Herbalife Ltd’s price-earnings ratio is 7.9 compared to the industry median at 18.5. This means that it has a lower price relative to its earnings compared to its peers. This makes Herbalife Ltd more attractive for value investors.

You can read more about Herbalife Ltd’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 4 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.

• BRF SA (ADR) stock has a Value Grade of B.
• Conagra Brands Inc stock has a Value Grade of B.
• Whole Earth Brands Inc stock has a Value Grade of B.
• Herbalife Ltd stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 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.

• 4 Undervalued Food Processing Stocks for Tuesday, May 14
• 3 Undervalued Food Processing Stocks for Monday, May 13
• Why B&G; Foods Inc’s (BGS) Stock Is Up 6.99%
• Why Beyond Meat Inc’s (BYND) Stock Is Up 11.25%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.