We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
4 Meat Food Stocks Poised for Growth on Solid Industry Trends
Read MoreHide Full Article
The Zacks Food – Meat Products industry players have been benefiting from increased consumer demand for protein-rich products, driven by a heightened focus on health and wellness. Initiatives to leverage these trends through product diversification, capacity expansion and the exploration of plant-based meats have been highly effective.
However, several meat companies have been battling hurdles associated with inflated input costs and high operating expenses. Nonetheless, the abovementioned upsides keep Tyson Foods, Inc. (TSN - Free Report) , Hormel Foods Corporation (HRL - Free Report) , Pilgrim's Pride Corporation (PPC - Free Report) and Beyond Meat, Inc. (BYND - Free Report) well-positioned for growth.
About the Industry
The Zacks Food – Meat Products industry comprises companies that manufacture, process, market, distribute and sell a wide range of meat products like chicken, pork, beef, prepared food and plant-based meats. Some companies also offer poultry and turkey products, alongside providing nutritional food products and supplements, desserts and drink mixes and industrial gelatin products. Most companies offer their products to retail and foodservice customers, while some cater to deli and commercial operators, including grocery retailers, grocery wholesalers, meat distributors, warehouse club stores, industrial food processing companies, chain restaurants, international export companies, school cafeterias and hospitals, among others. Some products offered include frozen whole chicken, primary pork cuts, salads, sandwiches and meatballs.
Major Trends Shaping the Future of the Meat Food Industry
Rise in Protein Consumption & Plant-Based Meat: The growing appetite for protein-rich diets has been benefiting meat companies, prompting them to continuously innovate their product offerings. This trend is primarily fueled by the heightened health consciousness among consumers, particularly fitness enthusiasts adopting high-protein diets such as keto. In recent years, the popularity of meatless alternatives and plant-based meat substitutes has been steadily rising, driven by consumers' preference for fresher, healthier options over traditional meat products. Most plant-based food alternatives are well-regarded for their reduced reliance on artificial ingredients and additives, making them a wholesome choice. These alternatives also serve as valuable sources of protein for those following vegan dietary practices. Industry experts believe that plant-based protein could lead to significant disruptions in the traditional meat market.
Dynamic Expansion Strategies: Industry players are actively diversifying their product ranges and strengthening market positions through strategic alliances, acquisitions and capacity expansions. Efforts include ramping up manufacturing capabilities through new facilities, plant expansions and partnerships with co-manufacturers. Concurrently, select companies are investing in automation technology, with a keen focus on accelerating the digitalization process. Additionally, some players are directing their efforts toward entering international markets, a strategy that is yielding favorable results.
Cost Concerns: High input costs have been a persistent issue for numerous participants in the meat food space. Companies have been incurring inflated costs of feed, supplies, logistics and labor. The continuation of inflationary pressures, along with increased operating expenditure, may strain margins.
Zacks Industry Rank Indicates Strong Prospects
The Zacks Food – Meat Products industry is housed within the broader Zacks Consumer Staples sector. The industry currently carries a Zacks Industry Rank #101, which places it in the top 40% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group’s earnings growth potential. Since the beginning of March 2024, the industry’s earnings estimate for the current fiscal year earnings has jumped 19.6%.
Given the industry’s impressive prospects, we present a few stocks that you may want to consider for your portfolio. However, before that, it’s worth taking a look at the industry’s performance and current valuation.
Industry vs. Broader Market
The Zacks Food – Meat Products industry has outperformed the broader Zacks Consumer Staples sector while underperforming the S&P 500 over the past year.
The industry has delivered a breakeven performance over this period compared with the broader sector’s decrease of 5.3%. Meanwhile, the S&P 500 has witnessed an increase of 26.9%.
One-Year Price Performance
Industry's Current Valuation
On the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing Consumer Staple stocks, the industry is currently trading at 15.2X compared with the S&P 500’s 21.91X and the sector’s 17.01X.
Over the past five years, the industry has traded as high as 21.76X and as low as 12.24X, with the median being 16.97X, as the chart below shows.
Price-to-Earnings Ratio (Past 5 Years)
4 Meat Food Stocks to Keep a Close Eye On
Tyson Foods: This Zacks Rank #3 (Hold) company benefits from a diverse portfolio of core proteins, including chicken, pork and beef. Strategic investments in brand building and innovation have been reinforcing Tyson Foods’ leadership position, driving long-term loyalty. The meat products giant has been benefiting from its three main pillars, which include driving growth across the core protein platform, fueling growth through its robust brands and focusing on prudent international expansion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Operational excellence is another key strength, supported by initiatives like plant closures and digitalization. These upsides are likely to continue working well for Tyson Foods. The Zacks Consensus Estimate for TSN’s fiscal 2024 earnings per share (EPS) has increased by 0.8% over the past 30 days to $2.60. Shares of TSN have risen 8.2% in the past year.
Price and Consensus: TSN
Hormel Foods: The company has been benefiting from its strategic priorities, which include enhancing its focus and fueling growth in the Retail unit, reinforcing leadership in Foodservice, pursuing solid global expansion, implementing the enterprise entertaining & snacking vision, emphasizing the One Supply Chain initiative and continuing the ongoing transformation and modernization of the business. Hormel Foods’ long-standing relationships, differentiated product portfolio, innovative solutions and impressive sales team are fueling growth in the Foodservice business.
This Zacks Rank #3 company has also been benefiting from its prudent buyouts and efforts to boost capacity. The Zacks Consensus Estimate for Hormel Foods’ current fiscal year EPS has remained unchanged over the past 30 days at $1.60. Shares of HRL have declined 23.4% in the past year.
Price and Consensus: HRL
Pilgrim’s Pride: The company has been benefiting from its strategic growth initiatives like a focus on key customers, capacity expansion, strengthening brands and reducing costs. Pilgrim’s Pride’s focus on key customers is a pathway for refining its portfolio and creating competitive advantages. Apart from this, this Zacks Rank #3 company has been steadily augmenting the marketing support of its brands as they expand and enter new regions.
This provider of fresh, frozen and value-added chicken and pork products continues to explore M&A opportunities to further diversify its portfolio across segments and geographies. The Zacks Consensus Estimate for Pilgrim’s Pride’s current fiscal year EPS has risen by 12.7% over the past 30 days to $4.25. Shares of PPC have surged 68.7% in the past year.
Price and Consensus: PPC
Beyond Meat: The growing consumer demand for healthier, sustainable and ethical food choices has been driving this Zacks Rank #3 company. As a manufacturer, marketer and vendor of plant-based meat alternatives, Beyond Meat has been experiencing gains from its strong product portfolio, especially due to its focus on innovation. Other than expanding its product range, Beyond Meat is benefiting from its initiatives to strengthen its distribution network.
With a rapidly growing market, expanding product portfolio and favorable industry trends, Beyond Meat looks well-positioned for the future. The Zacks Consensus Estimate for Beyond Meat’s bottom line for the current fiscal year has remained unchanged at a loss of $2.11 per share over the past 30 days. Shares of BYND have declined 57.3% in the past year.
Price and Consensus: BYND
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
4 Meat Food Stocks Poised for Growth on Solid Industry Trends
The Zacks Food – Meat Products industry players have been benefiting from increased consumer demand for protein-rich products, driven by a heightened focus on health and wellness. Initiatives to leverage these trends through product diversification, capacity expansion and the exploration of plant-based meats have been highly effective.
However, several meat companies have been battling hurdles associated with inflated input costs and high operating expenses. Nonetheless, the abovementioned upsides keep Tyson Foods, Inc. (TSN - Free Report) , Hormel Foods Corporation (HRL - Free Report) , Pilgrim's Pride Corporation (PPC - Free Report) and Beyond Meat, Inc. (BYND - Free Report) well-positioned for growth.
About the Industry
The Zacks Food – Meat Products industry comprises companies that manufacture, process, market, distribute and sell a wide range of meat products like chicken, pork, beef, prepared food and plant-based meats. Some companies also offer poultry and turkey products, alongside providing nutritional food products and supplements, desserts and drink mixes and industrial gelatin products. Most companies offer their products to retail and foodservice customers, while some cater to deli and commercial operators, including grocery retailers, grocery wholesalers, meat distributors, warehouse club stores, industrial food processing companies, chain restaurants, international export companies, school cafeterias and hospitals, among others. Some products offered include frozen whole chicken, primary pork cuts, salads, sandwiches and meatballs.
Major Trends Shaping the Future of the Meat Food Industry
Rise in Protein Consumption & Plant-Based Meat: The growing appetite for protein-rich diets has been benefiting meat companies, prompting them to continuously innovate their product offerings. This trend is primarily fueled by the heightened health consciousness among consumers, particularly fitness enthusiasts adopting high-protein diets such as keto. In recent years, the popularity of meatless alternatives and plant-based meat substitutes has been steadily rising, driven by consumers' preference for fresher, healthier options over traditional meat products. Most plant-based food alternatives are well-regarded for their reduced reliance on artificial ingredients and additives, making them a wholesome choice. These alternatives also serve as valuable sources of protein for those following vegan dietary practices. Industry experts believe that plant-based protein could lead to significant disruptions in the traditional meat market.
Dynamic Expansion Strategies: Industry players are actively diversifying their product ranges and strengthening market positions through strategic alliances, acquisitions and capacity expansions. Efforts include ramping up manufacturing capabilities through new facilities, plant expansions and partnerships with co-manufacturers. Concurrently, select companies are investing in automation technology, with a keen focus on accelerating the digitalization process. Additionally, some players are directing their efforts toward entering international markets, a strategy that is yielding favorable results.
Cost Concerns: High input costs have been a persistent issue for numerous participants in the meat food space. Companies have been incurring inflated costs of feed, supplies, logistics and labor. The continuation of inflationary pressures, along with increased operating expenditure, may strain margins.
Zacks Industry Rank Indicates Strong Prospects
The Zacks Food – Meat Products industry is housed within the broader Zacks Consumer Staples sector. The industry currently carries a Zacks Industry Rank #101, which places it in the top 40% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually gaining confidence in this group’s earnings growth potential. Since the beginning of March 2024, the industry’s earnings estimate for the current fiscal year earnings has jumped 19.6%.
Given the industry’s impressive prospects, we present a few stocks that you may want to consider for your portfolio. However, before that, it’s worth taking a look at the industry’s performance and current valuation.
Industry vs. Broader Market
The Zacks Food – Meat Products industry has outperformed the broader Zacks Consumer Staples sector while underperforming the S&P 500 over the past year.
The industry has delivered a breakeven performance over this period compared with the broader sector’s decrease of 5.3%. Meanwhile, the S&P 500 has witnessed an increase of 26.9%.
One-Year Price Performance
.jpg)
Industry's Current Valuation
On the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing Consumer Staple stocks, the industry is currently trading at 15.2X compared with the S&P 500’s 21.91X and the sector’s 17.01X.
Over the past five years, the industry has traded as high as 21.76X and as low as 12.24X, with the median being 16.97X, as the chart below shows.
Price-to-Earnings Ratio (Past 5 Years)
.jpg)
4 Meat Food Stocks to Keep a Close Eye On
Tyson Foods: This Zacks Rank #3 (Hold) company benefits from a diverse portfolio of core proteins, including chicken, pork and beef. Strategic investments in brand building and innovation have been reinforcing Tyson Foods’ leadership position, driving long-term loyalty. The meat products giant has been benefiting from its three main pillars, which include driving growth across the core protein platform, fueling growth through its robust brands and focusing on prudent international expansion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Operational excellence is another key strength, supported by initiatives like plant closures and digitalization. These upsides are likely to continue working well for Tyson Foods. The Zacks Consensus Estimate for TSN’s fiscal 2024 earnings per share (EPS) has increased by 0.8% over the past 30 days to $2.60. Shares of TSN have risen 8.2% in the past year.
Price and Consensus: TSN
Hormel Foods: The company has been benefiting from its strategic priorities, which include enhancing its focus and fueling growth in the Retail unit, reinforcing leadership in Foodservice, pursuing solid global expansion, implementing the enterprise entertaining & snacking vision, emphasizing the One Supply Chain initiative and continuing the ongoing transformation and modernization of the business. Hormel Foods’ long-standing relationships, differentiated product portfolio, innovative solutions and impressive sales team are fueling growth in the Foodservice business.
This Zacks Rank #3 company has also been benefiting from its prudent buyouts and efforts to boost capacity. The Zacks Consensus Estimate for Hormel Foods’ current fiscal year EPS has remained unchanged over the past 30 days at $1.60. Shares of HRL have declined 23.4% in the past year.
Price and Consensus: HRL
Pilgrim’s Pride: The company has been benefiting from its strategic growth initiatives like a focus on key customers, capacity expansion, strengthening brands and reducing costs. Pilgrim’s Pride’s focus on key customers is a pathway for refining its portfolio and creating competitive advantages. Apart from this, this Zacks Rank #3 company has been steadily augmenting the marketing support of its brands as they expand and enter new regions.
This provider of fresh, frozen and value-added chicken and pork products continues to explore M&A opportunities to further diversify its portfolio across segments and geographies. The Zacks Consensus Estimate for Pilgrim’s Pride’s current fiscal year EPS has risen by 12.7% over the past 30 days to $4.25. Shares of PPC have surged 68.7% in the past year.
Price and Consensus: PPC
Beyond Meat: The growing consumer demand for healthier, sustainable and ethical food choices has been driving this Zacks Rank #3 company. As a manufacturer, marketer and vendor of plant-based meat alternatives, Beyond Meat has been experiencing gains from its strong product portfolio, especially due to its focus on innovation. Other than expanding its product range, Beyond Meat is benefiting from its initiatives to strengthen its distribution network.
With a rapidly growing market, expanding product portfolio and favorable industry trends, Beyond Meat looks well-positioned for the future. The Zacks Consensus Estimate for Beyond Meat’s bottom line for the current fiscal year has remained unchanged at a loss of $2.11 per share over the past 30 days. Shares of BYND have declined 57.3% in the past year.
Price and Consensus: BYND