Tyson Foods is scored 13 for moat and 35 for management. The management score rests on a return on invested capital of 3.0% and a gross margin of 6.5% — figures that describe capital earning less than it costs to employ. Debt sits at 0.49x equity.
Three independent anchors set the price worth paying. Growth is modelled at 4.7% a year, below the 5.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 9.5x. That produces an intrinsic value of $6.07, a 10-CAP price of $40.40 and a payback time price of $40.03, with the value zone set at the highest of the three, $40.40. Today's price of $50.47 sits 25% above it.
The price is above the value zone and the business scores 13 for moat and 35 for management. Neither test argues for paying up here.
| Price | $50.47 |
| Market cap | $17.9B |
| P/E ratio | 31.0x |
| Return on invested capital | 3.0% |
| Gross margin | 6.5% |
| Debt to equity | 0.49x |
| Free cash flow yield | 6.2% |
| Growth rate used | 4.7% |
| Growth rate measured | 5.0% |
| Exit multiple assumed | 9.5x |
| Company | Moat | Buy price |
| Constellation Brands (STZ) | 32 | $121.34 |
| Us Foods Holding Corp (USFD) | 72 | $65.50 |
| Performance Food Group Co (PFGC) | 79 | $115.11 |
| Church & Dwight (CHD) | 62 | $48.65 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Tyson Foods rather than accepting ours.