Seneca Foods Corp (SENEA - Get Report) (SENEB - Get Report) produces and distributes processed fresh produce including but not limited to bottled products, canned fruits, vegetables, frozen vegetables and other food products. The company sells its products under the Seneca, Libby’s, Aunt Nellie’s Farm Kitchen, Stokely’s, Read, Taste of the West, Cimarron, Tendersweet, Blue Boy, Festa, and Seneca Farms brand names. The company also distributes select Green Giant frozen vegetables for General Mills, Inc. (GIS - Get Report). Seneca was established in 1949, has a current market capitalization of $335 million and an average daily volume of 26,000 shares.
Seneca Foods Corp (SENEA - Get Report) (SENEB - Get Report), at first glance appears undervalued. In particular, the company is currently trading below its book-value-per-share and on a price-to-sales basis, the company is trading at a ratio of 0.3, well below the industry average, which is closer to 1.5. However, Seneca’s operations, revenue and income can be highly volatile due to the seasonal nature of food production and volatile food prices. For example, weaker selling prices for the company’s canned products caused third-quarter income to collapse a staggering 52%, despite a 6% increase in revenue. Rising revenues and collapsing income is not usually indicative of a stable long-term investment.
Still, food is one of the most defensive industries around and Seneca Foods Corp (SENEA - Get Report) (SENEB - Get Report)’s long-term agreements with companies including General Mills, Inc. (GIS - Get Report), and the company’s six decades of operations history show that the company knows how to navigate the peaks and troughs of the volatile produce industry.Nevertheless, it would be wise for investors to have a view on the general outlook of both the produce and farming industry before considering a position in Seneca; not an area where I can claim to be an expert.