Smithfield Foods Inc (NASDAQ: SFD)

Sector: Consumer Defensive Industry: Packaged Foods CIK: 0000091388
Market Cap 9.71 Bn
P/B 1.50
P/E 11.23
P/S 0.64
ROIC (Qtr) 10.87
Div Yield % 4.01
Rev 1y % (Qtr) 12.39
Total Debt (Qtr) 2.39 Bn
Debt/Equity (Qtr) 0.37
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About

Investment thesis

Bull case

  • Strong operating cash flow of 1.02B provides robust 0.43x coverage of total debt 2.39B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 773M provide 10.74x coverage of short-term debt 72M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 8.64B provides 3.61x coverage of total debt 2.39B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 1.02B provides exceptional 73.21x coverage of minority interest expenses 14M, showing strong core operations.
  • Operating cash flow of 1.02B provides exceptional 21.81x coverage of interest expenses 47M, showing strong debt service capability.

Bear case

  • Operating cash flow of 1.02B barely covers its investment activities of (403M), with a coverage ratio of -2.54, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 1.02B provides thin coverage of dividend payments of (315M) with a -3.25 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 773M provide limited coverage of acquisition spending of (28M), which is -27.61x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 1.02B barely covers operating expenses of (96M) with a -10.68 ratio, suggesting thin operational efficiency margins and limited flexibility.
  • Free cash flow of 794M represents just -66.17x of debt issuance (12M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Consolidation Items Breakdown of Revenue (2024)

Peer comparison

Companies in the Packaged Foods
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 KHC Kraft Heinz Co 28.20 Bn -4.82 1.13 21.22 Bn
2 GIS General Mills Inc 26.99 Bn 20.72 1.54 13.73 Bn
3 JBS Jbs N.V. 17.81 Bn 10.08 0.23 23.92 Bn
4 MKC Mccormick & Co Inc 16.10 Bn 44.21 3.77 4.00 Bn
5 HRL Hormel Foods Corp /De/ 12.37 Bn 18.03 1.34 2.86 Bn
6 SJM J M SMUCKER Co 11.08 Bn 19.60 1.97 7.91 Bn
7 PPC Pilgrims Pride Corp 10.32 Bn 9.54 0.56 3.29 Bn
8 MICC Magnum Ice Cream Co N.V. 9.71 Bn 28.17 1.04 4.02 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.97 1.47
EV to Cash from Ops. EV/CFO 10.90 29.75
EV to Debt EV to Debt 4.67 27.85
EV to EBIT EV/EBIT 9.14 86.88
EV to EBITDA EV/EBITDA 7.15 -156.20
EV to Free Cash Flow [EV/FCF] EV/FCF 14.07 -5.67
EV to Market Cap EV to Market Cap 1.15 1.15
EV to Revenue EV/Rev 0.73 7.32
Price to Book Value [P/B] P/B 1.50 8.48
Price to Earnings [P/E] P/E 11.23 14.45
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.74 4.58
Dividend Payout Ratio % Div Payout % (Qtr) 33.80 3.76
Dividend per Basic Share Div per Share (Qtr) 0.75 0.65
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 37.13 22.76
Interest Coverage Int. cover (Qtr) 26.00 6.64
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 37.23 -118.07
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 178.06 43.48
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 0.66
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 26.58 -48.16
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 48.53 -152.35
EBIT Growth (1y) % EBIT 1y % (Qtr) 44.44 -50.79
EBT Growth (1y) % EBT 1y % (Qtr) 51.22 -54.94
EPS Growth (1y) % EPS 1y % (Qtr) 29.07 -28.10
FCF Growth (1y) % FCF 1y % (Qtr) -29.48 7.02
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 22.57 439.70
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.32 1.01
Cash Payout Ratio Cash Payout (Qtr) 0.25 0.12
Cash Ratio Cash Ratio (Qtr) 0.52 0.86
Current Ratio Curr Ratio (Qtr) 3.10 2.60
Debt to Equity Ratio Debt/Equity (Qtr) 0.37 2.21
Interest Cover Ratio Int Coverage (Qtr) 26.00 6.64
Times Interest Earned Times Interest Earned (Qtr) 26.00 6.64
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 10.20 -919.13
EBIT Margin % EBIT Margin % (Qtr) 8.01 -1,474.87
EBT Margin % EBT Margin % (Qtr) 7.70 -1,537.76
Gross Margin % Gross Margin % (Qtr) 13.20 26.98
Net Profit Margin % Net Margin % (Qtr) 5.70 -1,538.60