Peter Lynch said that an investor should keep tabs on his investments.
And this is why I make quarterly posts of my largest holdings. They
help me keep abreast of progress in the company. And they allow me
to periodically double check my investment thesis.
| SEB |
| Price | $ 4039.00 |
| Market Cap | $ 4725 M |
| P/E TTM | 12.9 x |
| Div yield | 0.0 % |
| P/TBV | 1.74 |
| ROE | 13.4 % |
| ROIC | 11.9 % |
Seaboard is my second largest holding and luckily for me, its
stock has been on a tear for the last two years. The company is steadily expanding its
footprint in the food industry. But it's core business is still pork. And
Seaboard had its most profitable year
last year because of great results from the pork segment.
Revenue for 2014 was $6.47 B versus $6.67 B the previous year.
Income was $0.37 B versus $0.21 B the previous year. So sales
did not grow but profits grew to the highest ever on margin expansion.
This margin expansion was all from pork.
Pork revenue was $1.72 B versus $1.71 B the previous year.
Pork income was $0.35 B versus $0.15 B the previous year. Pork's recent performance was confluence of favourable pork and corn prices. See below.
 |
| US Hog Farm Prices |
 |
| US Corn Prices per Bushel |
Corn is the largest component of pork feed and I believe corn price recently is part of a natural decline in commodity prices. Commodity prices are cyclical and the high oil, gold and food prices of the last several years have to go down by definition. Pork prices on the other hand had a temporary boost due to a widespread virus t.hat luckily did not affect Seaboard. As the chart shows pork prices are coming back down in the last few months. But I think the corn and feed price drops will more than offset that.
The other Seaboard segments were generally good. The company's interest in turkey producer Butterball did well reflecting similar dynamics with pork: higher product prices with lower feed prices. And the marine division broke even last year versus a $26 M loss in 2013. I feel the improved fuel costs should help the marine segment to be profitable in 2015.
No comments:
Post a Comment