SEB - Seaboard: Grains Pigs Turkeys Sugar Ships Mills Warehouses Energy In Bargain Bin

2024-05-02 09:51:09 ET

Summary

• Seaboard is a diversified farm-economy player, with grain trading and milling, hog/turkey processing, sugar and biofuel refining, ocean transportation services, plus power generation providing sales.
• Weak earnings since early 2023 have dragged the share price lower, to a valuation level rarely reached in past trading.
• The share quote is now severely undervalued, selling at a discount of 35% on my estimated net-asset breakup value.
• As oversupplied meat markets in America rebalance over time (cyclical business), strengthening SEB profit margins should support a share price move back above book value into 2025.

Seaboard Corp. ( SEB ) reported another disappointing quarter yesterday (April 30th), adding pressure to a stock quote already drifting lower for several years. A material drop in operating sales from last year's Q1 (although sales "per" share rose) was balanced against much better overall income generation of $22 per share (less income losses from hog operations were notable). The trailing 12-month GAAP EPS total is now up to roughly $241 for each share, but down from a peak of $438 in calendar 2022. On $3,245 for a share quote, SEB's trailing earnings yield is now a respectable 7.4% (vs. the S&P 500 index equivalent under 4%)....

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