Smithfield Foods (SFD) AI Stock Analysis

• Market Cap: $8.84B
• Dividend Yield: 4.44%
• Average Volume (3M): 747.29K
• Price to Earnings (P/E): 10.2
• Beta (1Y): 0.51
• Revenue Growth: N/A
• EPS Growth: N/A
• Country: US
• Employees: 36,500
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Agricultural Farm Products
• EPS (TTM): 0.58
• Shares Outstanding: 393,112,700
• 10 Day Avg. Volume: 663,149
• 30 Day Avg. Volume: 747,290
• PEG Ratio: <0.01
• Price to Book (P/B): 1.63
• Price to Sales (P/S): 0.67
• P/FCF Ratio: 12.07
• Enterprise Value/Market Cap: 1.25
• Enterprise Value/Revenue: 0.72
• Enterprise Value/Gross Profit: 5.47
• Enterprise Value/Ebitda: 7.01
• 1Y Price Target: $29.75
• Price Target Upside: 32.69% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 69 Neutral
• Price Target: $24.50 ▲(9.28% Upside)

Smithfield Foods' overall score is driven by strong earnings performance and favorable valuation metrics. The company's financial stability and improved profitability are significant strengths. However, declining revenue and technical indicators suggest caution. The raised outlook and record profits provide optimism, but challenges in certain segments and market conditions remain.

Positive Factors

Strong Cash Flow Management

Strong cash flow management ensures Smithfield Foods can fund operations, invest in growth opportunities, and maintain financial stability.

Vertically Integrated Model

The vertically integrated model allows Smithfield to control the supply chain, enhancing efficiency and responsiveness to market changes, supporting long-term profitability.

Innovative Product Launches

Innovative product launches help Smithfield capture new market segments and drive revenue growth, strengthening its competitive position.

Negative Factors

Declining Revenue

Declining revenue indicates potential challenges in market demand or competition, which could impact long-term growth prospects.

Challenges in Fresh Pork Segment

Challenges in the Fresh Pork segment could affect profitability and market share, as this segment faces pricing pressures and higher costs.

Higher Raw Material Costs

Rising raw material costs can erode margins and profitability, making it crucial for Smithfield to manage costs effectively to sustain long-term financial health.

Smithfield Foods Business Overview & Revenue Model

Company Description

Smithfield Foods, Inc. manufactures and markets packaged meats and fresh pork in the United States and internationally. Its Packaged Meats segment processes fresh meat into various packaged meats products, including bacon, sausage, hot dogs, deli and lunch meats, dry sausage products, ham products, ready-to-eat products, and prepared foods, such as pre-cooked entrees, bacon, and sausage to retail and foodservice customers in the United States. This segment markets its packaged meats products under the Smithfield, Eckrich, Nathan's Famous, Farmland, Armour, Farmer John, Kretschmar, Krakus, John Morrell, Cook's, Gwaltney, Carando, Margherita, Curly's, and Smithfield Culinary brands, as well as under private labels. The company's Fresh Pork segment process live hogs into a variety of primal, sub-primal, and offal products, such as bellies, butts, hams, loins, picnics, and ribs. This segment sells its fresh pork products to retail, foodservice and industrial customers, as well as to export markets, including China, Mexico, Japan, South Korea, and Canada. Its Hog Production segment produces and raises its hogs on various company-owned farms and farms that are owned and operated by third-party contract farmers in the United States and Mexico. The Hog Production segment also sells grains to external customers. The company's bioscience operations use raw materials from hogs that process to manufacture heparin products, including an active pharmaceutical ingredient that mitigates the risk of blood clots. The company was founded in 1936 and is based in Smithfield, Virginia. Smithfield Foods, Inc. is a subsidiary of SFDS UK Holdings Limited.

How the Company Makes Money

Smithfield Foods generates revenue primarily through the sale of pork and processed meat products. The company's revenue model is built on multiple key streams, including fresh pork sales, packaged meats, and value-added products. Fresh pork is typically sold to wholesalers and retailers, while packaged meats are marketed directly to consumers and food service providers. Additionally, the company engages in export activities, selling its products to international markets. Smithfield benefits from significant partnerships with major grocery chains and restaurants, which provide consistent demand for its products. The company also invests in supply chain efficiencies and sustainability practices to enhance profitability. Fluctuations in pork prices, consumer demand trends, and operational efficiencies are critical factors influencing its earnings.

Smithfield Foods Financial Statement Overview

Summary

Smithfield Foods shows resilience with improved profitability and strong cash flows. However, the decline in revenue is a concern, potentially impacting future growth. The company maintains a stable financial position with manageable leverage.

Income Statement

Smithfield Foods demonstrated a recovery in profitability over the past year, with an impressive increase in gross profit and EBIT margins from a challenging previous year. The gross profit margin improved significantly to 13.42%. However, revenue has seen a decline from $16.2 billion in 2022 to $14.14 billion in 2024, indicating a negative growth trend. The net profit margin also improved to 6.74%, highlighting better cost management. Overall, the company is showing stabilization after a turbulent year, but declining revenue is a concern.

Balance Sheet

The balance sheet of Smithfield Foods is solid with a moderate debt-to-equity ratio of 0.40, indicating manageable leverage levels. The equity ratio stands at 52.78%, suggesting a strong equity base relative to total assets. Return on equity (ROE) improved to 16.33%, reflecting enhanced profitability and efficient use of equity. The company's financial stability is evident, but the reduction in total assets over the years is noteworthy.

Cash Flow

Smithfield Foods shows robust cash flow metrics with an improvement in free cash flow and operating cash flow. The operating cash flow to net income ratio is 1.19, indicating healthy cash generation relative to reported earnings. Free cash flow has grown, but the free cash flow to net income ratio of 0.83 suggests room for improvement in cash conversion. Overall, cash flow management appears strong, but potential for better efficiency exists.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022
Income Statement
Total Revenue	15.26B	14.14B	14.64B	16.20B
Gross Profit	2.02B	1.90B	889.00M	1.50B
EBITDA	1.58B	1.47B	374.00M	1.57B
Net Income	864.00M	953.00M	17.00M	870.00M
Balance Sheet
Total Assets	11.52B	11.05B	13.32B	13.85B
Cash, Cash Equivalents and Short-Term Investments	773.00M	943.00M	687.00M	547.00M
Total Debt	2.39B	2.36B	2.46B	2.47B
Total Liabilities	4.80B	5.00B	5.83B	6.28B
Stockholders Equity	6.47B	5.83B	7.24B	7.37B
Cash Flow
Free Cash Flow	472.00M	787.00M	633.00M	179.00M
Operating Cash Flow	803.00M	1.14B	1.03B	517.00M
Investing Cash Flow	-232.00M	-469.00M	-322.00M	193.00M
Financing Cash Flow	-95.00M	-464.00M	-533.00M	-477.00M

Smithfield Foods Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 22.42
• 50DMA: Negative
• 100DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SFD, the sentiment is Neutral. The current price of 22.42 is above the 20-day moving average (MA) of 21.92, below the 50-day MA of 22.79, and equal to the 200-day MA of ―, indicating a neutral trend. The MACD of -0.21 indicates Negative momentum. The RSI at 45.83 is Neutral, neither overbought nor oversold. The STOCH value of 33.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SFD.

Smithfield Foods Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CALM	73 Outperform	$3.51B	3.11	48.69%	10.53%	65.80%	197.95%
SFD	69 Neutral	$8.84B	10.20	―	4.44%	―	―
TSN	69 Neutral	$20.08B	42.60	2.60%	3.48%	2.12%	-40.75%
BG	66 Neutral	$18.85B	10.74	10.24%	3.14%	10.29%	17.32%
ADM	64 Neutral	$29.41B	25.20	5.35%	3.55%	-4.31%	-29.96%
FDP	64 Neutral	$1.70B	21.97	3.95%	3.34%	1.11%	414.23%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%