Simple Concepts Research Group

Is Wall Street Watching Seneca Foods (NASD: SENEA) For Value?

by | Nov 19, 2021 | Stock Picks

Seneca Foods (SENEA) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Seneca Foods (SENEA) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Seneca Foods Fundamentals

SENEA Stock Rating

Stock Price Target: $64.39

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Seneca Foods in comparison to the Food Processing industry and the S&P 500.

Seneca Foods is a Small Cap company with a Market Cap of $440M.

How are investors using Seneca Foods earnings yield to assess the company?

Seneca Foods (SENEA stock)_ Earnings Yield in Comparison to the Food Processing Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Seneca Foods is 43.10%, in comparison to 3.39% for the S&P 500 and 1.63% for the 10-year treasury bond. The median earnings yield for the Food Processing industry is 7.18%.

What does Seneca Foods Price-to-Earnings Ratio (P/E) tell investors about the company?

Seneca Foods (SENEA)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Food Processing Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Seneca Foods is currently trading at a P/E of 3.67. The P/E for the Food Processing industry is 17.14 and the P/E for the S&P 500 is 28.63.

What is the current Price-to-Sales Ratio (P/S) for Seneca Foods?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Seneca Foods is currently trading at a P/S of 0.29. The P/S for the Food Processing industry is 1.71 and the P/S for the S&P 500 is 3.11.

How does Seneca Foods Price-to-BookRatio (P/B) compare to the Food Processing industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Seneca Foods P/B ratio is 0.75. The P/B for the Food Processing industry is 2.57 and the P/B for the S&P 500 is 4.84.

How attractive is Seneca Foods Return on Invested Capital (ROIC) to investors?

Seneca Foods (SENEA)_ Return on Invested Capital in Comparison to the Food Processing Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Seneca Foods ROIC is currently 17.58% in comparison to 17.53% for the Food Processing industry and 8.60% for the S&P 500.

What is Seneca Foods YTD Performance in comparison to its industry and the total market?

The year-to-date (YTD) performance is the amount of profit/loss realized by a stock since the first trading day of the current calendar year. 

The YTD performance for Seneca Foods is 14.16%. The Food Processing industry has a YTD performance of 5.74% in comparison to the YTD S&P 500 performance of 25.64%.

Seneca Foods (SENEA)_ YTD Performance in Comparison to the Food Processing Industry and the S&P 500

Recent Financial Results

  • Net sales of $372.3M compared to $390.3M in Q2 2021
  • Gross margin as a percentage of net sales for the second quarter is 11.5% in 2022 as compared to 12.5% in 2021
  • Net sales totaled $607.3M compared to $678.5M in previous years quarter
  • Gross margin as a percentage of net sales for the six months ended October 2, 2021 of 12.6% as compared to 14.4% in previous years quarter

Stock Price Target: $64.39

Company Overview

SENEA Stock Rating

Seneca Foods Corporation provides packaged fruits and vegetables in the US and internationally. The company offers products under various national and regional brands that the company owns or licenses, including Seneca, Libby’s, Aunt Nellie’s, READ, Green Valley, and CherryMan.

Seneca also produces and sells Green Giant and Del Monte vegetable products under contract packing agreements. It provides its products food service distributors, industrial markets, other food packagers and export customers in 90 countries, as well as federal, state, and local governments for school and other feeding programs.

Seneca Foods was incorporated in 1949 and is headquartered in Marion, New York. The current CEO is Paul Palmby.

Be sure to add Seneca Foods (SENEA stock) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.