Global Protein Leader Trading at a Discount After NYSE Listing

JBS N.V. is the world's largest protein producer, operating across beef, pork, chicken, and prepared foods. The company processes and sells fresh and frozen proteins, value-added prepared meals, and branded consumer products. Its operations span North America, South America, Europe, and Australia, with major brands including Pilgrim's Pride, Moy Park, and Seara. JBS generates revenue primarily through wholesale and retail channels, supplying supermarkets, foodservice distributors, and quick-service restaurants globally. With annual revenue exceeding $70B, the company operates at a scale that few competitors can match, giving it significant procurement and distribution advantages.

• Near-Term: Margin recovery in U.S. beef as cattle supplies stabilize; continued strength in chicken and pork segments; cost inflation moderating.
• Medium-Term: Expansion of value-added and branded product mix, which carries higher margins; growth in Asian export markets, particularly China and Japan; operational efficiencies from automation and vertical integration.
• Strategic: Potential index inclusion following the NYSE listing, which could drive passive fund inflows; further portfolio optimization through divestitures of non-core assets.

The narrative is one of cyclical trough and recovery. FY2024 represented a margin low as beef spreads compressed, dragging EPS to $1.10. We model a gradual recovery as input costs normalize and the value-added mix improves, driving EPS back toward $1.55 by FY2026. At the current $10.80 price, shares would trade at just 7.0x our FY2026 estimate — a compelling entry point if the recovery materializes.

The global protein market is estimated at over $1.5 trillion in annual revenue, with JBS holding a leading share. The industry is characterized by cyclicality, thin margins, and significant scale advantages. Key competitors include:

• Tyson Foods (TSN): Major U.S. protein producer, heavily exposed to chicken and beef.
• Marfrig (MRFG3.SA): Brazilian beef giant, direct competitor in South America.
• Minerva (BEEF3.SA): Focused on South American beef exports.
• Pilgrim's Pride (PPC): Majority-owned by JBS, a pure-play chicken producer.

JBS's diversification across proteins and geographies is a key differentiator, though it also exposes the company to a broader set of regulatory and trade risks.

DCF Discussion

Using a WACC of approximately 8.5% (reflecting the company's stable cash flows and moderate leverage) and a terminal growth rate of 2.5%, our DCF analysis yields a fair value estimate in the mid-to-high teens per share. This is highly sensitive to margin assumptions; even at conservative margin recovery, the shares appear undervalued at $10.80.

Comparable Company Multiples

JBS trades at a discount to Tyson on every metric, and roughly in line with Brazilian peers despite its superior scale and diversification. We believe the discount to Tyson is unjustified given JBS's larger revenue base and global footprint.

• Cyclical Margin Pressure: Beef margins are highly sensitive to cattle prices and grain costs; a prolonged downcycle could delay earnings recovery.
• High Short Interest: While a squeeze is possible, persistent shorting reflects genuine concerns about leverage and governance.
• Currency and Trade Exposure: Significant revenue from Brazil and other emerging markets exposes JBS to FX volatility and trade policy shifts.
• Regulatory and ESG Scrutiny: Protein producers face increasing scrutiny over environmental practices, labor conditions, and deforestation links, which could lead to fines or reputational damage.
• Integration and Governance Risk: The N.V. structure and complex corporate organization may continue to weigh on the valuation multiple.