New and Improved Smithfield Foods IPO’ing (Again)

WH Group, the largest pork producer in the world, announced plans to spin off Smithfield Foods (ticker SFD), the US-based entity it acquired in 2013 for $4.7 billion. WH plans to sell approximately 20% of its stake, maintaining its control. WH plans to focus on its burgeoning Chinese operations. While a specific price range has not been set, WH stated it will be no less than a market cap of $5.38 billion.

While the Smithfield brand may not be a household name, SFD’s portfolio encompasses brands ranging from specialty to value to super-regional to national (see the chart below).

Since being acquired, the company has transformed from a vertical provider to a more focused provider of packaged meats. Packaged meats have higher margins, and they accounted for 58% of total revenue and 109% of operating profit for the nine months through September 29, 2024. 

In its totality, revenue increased a modest 9% year over year from 2014, ten years ago. Packaged meats increased from 54% to 57% of the total, while profit margins increased from 6% to 13% over that same time period. Packaged meats are the focus and should propel the company forward with an improving margin profile. 

SFD will use the capital proceeds from the IPO to expand its capacity in packaged meats. Conversely, they are reducing their internal hog supply, partnering with independent suppliers, in order to reduce operating costs. Bottom line as packaged meats go so goes SFD.

Leverage Data Insights for Smarter Investment Decisions

Smithfield Foods’ pivot to packaged meats reflects the broader industry trend toward higher-margin product lines. But as an investor, how can you assess the granular data points that signal sustainable growth and profitability?

Daloopa provides the tools you need to dive deep into fundamental data. Our platform automates data extraction and modeling processes, giving you instant access to clean, accurate, and timely financial insights—allowing you to focus on strategic decisions without the hassle of manual updates.