Smithfield Foods, Inc. (SFD): A Bull Case Theory

We came across a bullish thesis on Smithfield Foods, Inc. on Valueinvestorsclub.com by Dr1004. In this article, we will summarize the bulls’ thesis on SFD. Smithfield Foods, Inc.'s share was trading at $21.65 as of December 1st. SFD’s trailing and forward P/E were 9.74 and 9.75 respectively according to Yahoo Finance.

Smithfield (SFD) has undergone a decade-long transformation from a volatile, commodity-driven protein producer into a stable, higher-margin packaged food company, yet the market continues to value it like the old Smithfield. Despite its evolution, the stock trades at just 10–11x forward earnings, far below CPG peers such as Hormel at 17x and Tyson at 14–15x, even though SFD is now structurally stronger and less cyclical.

The core of the business is Packaged Meats, which generates 75% of profits through brands like Armour, Smithfield, and Eckrich, supported by years of SKU rationalization, share gains, and expansion into higher-growth categories such as dry sausages and convenience-oriented meat products.

Fresh Pork has been turned from a breakeven processor into a stable profit center, while Hog Production—historically the main source of earnings volatility—is being deliberately shrunk through outsourcing, materially reducing exposure to commodity swings. With a leadership team that has spent decades at the company and is disciplined in capital allocation, SFD is positioning itself as a consistent CPG operator, reinforced by a new dividend, low leverage, and a long-term plan to repurchase WH Group’s majority stake.

Near-term catalysts include a potential “beat and raise” setup, as management’s guidance appears conservative, and favorable protein dynamics with beef prices at record highs driving consumer trade-down to pork. As the business mix continues shifting toward high-margin packaged foods and away from hog production, earnings should smooth out, encouraging a re-rating toward CPG multiples. Valued at 13–14x 2026 EPS of $2.50, SFD offers 40% upside to $32–$35, with recent share weakness providing an attractive entry point.

Previously we covered a bullish thesis on Cal-Maine Foods, Inc. (CALM) by Charly AI in April 2025, which highlighted strong pricing power, exceptional revenue growth, and balance sheet strength. The company's stock price has depreciated approximately by 9.76% since our coverage. This is because the thesis didn’t fully play out amid normalization in egg prices. The thesis still stands as CALM remains resilient. Dr1004 shares a similar view but emphasizes SFD’s structural transformation.

Smithfield Foods, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held SFD at the end of the second quarter which was 29 in the previous quarter. While we acknowledge the potential of SFD as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.