By Andrew Bary

The world's largest meatpacker made its debut on the New York Stock Exchange in June and is getting treated like hamburger rather than steak.

Brazil's JBS deserves better, given its size, international scale, and growth record. JBS is the No. 1 producer of beef and poultry globally and No. 2 of pork. Its sales of $77 billion last year made it the world's largest food company, ahead of Nestlé at $72 billion and PepsiCo at $53 billion.

The gritty and grisly meatpacking business lacks the glamour of packaged food. But growth prospects are at least as good as the world consumes more of what the industry euphemistically calls protein. JBS owns the Swift meat business and an 82% stake in poultry producer Pilgrim's Pride. JBS' stake in Pilgrim's Pride, now worth around $9 billion, is one of the company's most valuable assets.

JBS shares now trade at $14.30 on the NYSE after redomiciling in the Netherlands and moving its primary listing to the U.S. from Brazil. The stock fetches just seven times projected 2025 earnings of $1.92 a share.

It's also cheap, trading for only 5.5 times enterprise value to estimated 2025 earnings before interest, taxes, depreciation, and amortization, or Ebitda, a common yardstick for the meat industry. Tyson Foods is around eight times. JBS' enterprise value is $32.5 billion -- $16 billion of market cap plus $16.5 billion of net debt.

The JBS bull case is that it's valued at a sizable discount to U.S. meat companies like Tyson, and that it will close the gap as its story becomes better known. Another part of that story is the prospect of solid growth, as JBS embarks on a five-year plan to spend $1 billion annually on expansion, including a U.S. sausage plant and expanded American pork facilities.

BofA Securities analyst Isabella Simonato called JBS a "best-in-class protein compounder at a bargain" after it started trading on June 13. She cited an "attractive valuation" -- the stock hasn't budged since then -- and a "broadening of the business by protein and geography." She has a Buy rating and price target of $21.

"The company has shown disciplined capital allocation, investing in internal growth while also maintaining an attractive dividend. We expect JBS to execute additional accretive acquisitions over time that will increase the percentage of revenue in higher margin segments," says Michael Martino, a founder and principal of Mason Capital Management, a JBS holder.

The company hasn't officially set a dividend following the listing but has said it plans to pay out about $1 billion annually, which could result in a yield close to 7%.

JBS this past week reported its first quarterly results as an NYSE-listed company. Those results were slightly weaker than expected. Second-quarter earnings were 48 cents a share and adjusted Ebitda was $1.4 billion.

Investors reacted negatively as the stock fell 4.5%. One reason is that its big U.S. beef business is operating in the red due to smaller cattle herds, which have made the animals relatively expensive compared with beef prices. That hurt JBS' margins.

The reported financials from JBS were also confusing, with results provided in both IFRS, an international accounting standard, and U.S. GAAP accounting. And there were some technical glitches in the conference call audio.

The company needs to do some work in better presenting its results and story to American investors. That's an easy fix. JBS would also benefit from setting a dividend and paying it quarterly, rather than semiannually as it has done in recent years.

The meatpacker is controlled by Brazil's Batista family, which owns 48% of the stock. Two brothers, Wesley and Joesley Batista, the sons of JBS' founder, José Batista Sobrinho, exercise control through a holding company, J&F Investimentos.

The family holding company agreed to pay $256 million in 2020 in a criminal penalty to resolve a U.S. Department of Justice inquiry into violations of the Foreign Corrupt Practices Act. That stemmed from what Justice called "J&F's scheme to pay millions of dollars in bribes to government officials in Brazil in exchange for obtaining financing and other benefits for J&F and J&F-owned entities."

Back in 2020, JBS wrote in a letter to shareholders that it and its controlling shareholder are committed to best corporate practices and close cooperation with authorities in all jurisdictions in which they operate, according to a Wall Street Journal article at the time. "The agreements announced today [Oct. 14] represent an important step in their continuous efforts to improve their compliance and corporate governance programs," JBS said.

While the Batista brothers are on the board, the company has professional managers. Mason Capital's Martino lauds the company's Brazilian top executives, including CEO Gilberto Tomazoni and Chief Financial Officer Guilherme Cavalcanti.

"The governance issues in the past have been put to rest, and the Batista family is fully supportive of driving value for all shareholders, Martino says.

Over the past five years, the company's revenue and Ebitda have grown at an 8% annual rate -- better than the more richly valued Tyson.

JBS' $1 billion annual expansion plan has projected annual returns of about 20%. The company noted in an investor presentation earlier this year that its stock would more than double if it were valued at more than eight times Ebitda, in line with the average of comparable companies.

Another source of upside is the U.S. beef business, now operating in the red. If margins normalize, the company could generate $7 billion of Ebitda in 2027, up from an estimated $6 billion in 2025.

Then there are potential benefits from index inclusion.

JBS isn't in any major U.S. indexes, but it is positioned for potential inclusion in indexes such as the Russell 1000 and the S&P MidCap 400 during 2026. That would raise JBS' profile and attract both index buyers and active investors, many of which see no need to buy stocks not in one of their benchmarks.

The company's current market capitalization of about $16 billion makes it too small for inclusion in the S&P 500 index, which has a minimum market cap of $22.7 billion.

JBS may be a little rough around the edges now, but it has a leading franchise, a cheaply valued stock, and lots of potential catalysts for shareholders. Long-term investors should take a bite.

Write to Andrew Bary at andrew.bary@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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August 15, 2025 16:25 ET (20:25 GMT)

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