Seaboard Corporation: Attractive Even With Historical Mediocrity


         Seaboard Corporation has a long history of failing to grow profits and cash flows even as revenue has climbed steadily.

         This means the company deserves to trade at some discount relative to other similar businesses, but current prices are appealing right now.

         Even if we revert back to levels seen in 2020, the company looks like a solid prospect long term.


Daniel Jones, Seeking Alpha

Jan. 13, 2022


When you analyze most companies, you will come to realize that they tend to have one or two core areas that they focus on. Outside of that, they may have a few business components that don't make much sense in the grand scheme of things but that serve as a means of diversification for management and shareholders alike. But every once in a while, you will come across an enterprise that is truly built up of multiple companies that have little to nothing to do with one another. These conglomerates can be incredibly valuable, often because they aren't favored by the investment community because of the lack of focus that it is perceived to exist within them. One interesting prospect that fits this definition is a company called Seaboard Corporation (SEB). In recent years, management has successfully grown the company's top line. Unfortunately, profits and cash flows have meandered about, sticking within a fairly narrow range. But during its 2021 fiscal year, however, the company showed that it can break out of that range. If this pattern persists, the company could offer investors significant upside potential. But even if it doesn't, shares are priced attractively enough today that the risk lies in the hands of those who are bearish the company, not those who are bullish it.


Dissecting Seaboard ...


... Though the Pork segment of the company is its most profitable, it is not its largest. That designation belongs to its CT&M segment, which acts as an integrated agricultural commodity trading, processing, and logistics company. It operates facilities in 29 countries, mostly throughout Africa and South America. Annually, it is responsible for transporting around 14 million metric tons of wheat, corn, soybeans, and other related commodities. It also produces 6 million metric tons of wheat flour, maize meal, manufactured feed, and oilseed crush commodities each year. This particular segment accounts for 56% of the company's overall sales, but made up just 42.8% of profits in 2020...


Takeaway ...


more, including links, charts