T. Rowe Price Equity Income Fund Gains 1 New Holding, Divests 3 Others
- By Sydnee Gatewood
During the second quarter, the T Rowe Price Equity Income Fund (Trades, Portfolio) established one new position and divested three others.
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Warning! GuruFocus has detected 1 Warning Sign with TSN. Click here to check it out.
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The intrinsic value of TSN
Managed by John Linehan, the fund seeks dividend income and long-term capital growth by investing in mostly large-cap companies. The current portfolio is composed of 101 stocks.
The fund purchased nearly 3.7 million shares of Tyson Foods Inc. (TSN) for an average price of $61.26 per share, giving it 1.08% portfolio space.
The food company has a market cap of $22.1 billion; its shares were trading around $61.67 on Tuesday with a price-earnings (P/E) ratio of 13.01, a price-book (P/B) ratio of 2.26 and a price-sales (P/S) ratio of 0.63.
The Peter Lynch chart below shows the stock is trading below its fair value.
GuruFocus ranked the company's financial strength 6 of 10 and its profitability and growth 7 of 10. Tyson's trailing dividend yield is 1.33% and its forward dividend yield is 1.47%. Over the past five years, the company has grown its dividend at a rate of 31.4% per year.
With its purchase, the fund became Tyson's largest guru shareholder with 1.03% of its outstanding shares. A total of 13 gurus hold the stock.
The fund exited its positions in The Hershey Co. (HSY), FirstEnergy Corp. (FE) and Och-Ziff Capital Management Group LLC (OZM) during the quarter.
Having established the 310,000-share position in Hershey in fourth-quarter 2016, T. Rowe Price sold the position for an average price of $110.41 per share. The trade had an impact of -0.16% on the portfolio.
The confectioner has a market cap of $22.61 billion; its shares were trading around $106.27 per share on Tuesday with a P/E ratio of 57.4, a P/B ratio of 27.2 and a P/S ratio of 3.04.
According to the Peter Lynch chart below, the stock is trading above its fair value.
GuruFocus ranked Hershey's financial strength 5 of 10 and its profitability and growth 8 of 10. The trailing dividend yield is 2.32%, and the forward dividend yield is 2.34%. The company has grown its dividend by 12% per year over a five-year period.
With 1.86% of outstanding shares, Pioneer Investments (Trades, Portfolio) is the largest shareholder among the gurus.
The fund sold its remaining 875,000 shares of FirstEnergy for an average price of $29.69 per share. The divestment contracted the portfolio by -0.13%. The fund has been reducing the position since first-quarter 2016.
The energy company has a market cap of $13.5 billion; its shares were trading around $30.34 on Tuesday with a forward P/E ratio of 10.6, a P/B ratio of 2.2 and a P/S ratio of 0.92.