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Tyson Hits New 52-Week High on Decent 3Q

TSN BGS PPC

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Shares of the meat processor Tyson Foods Inc. (TSN - Analyst Report) reached a new 52-week high of $29.85 on Aug 5, following its better-than-expected third-quarter fiscal 2013 earnings results announced the same day before the bell.

The closing price of Sprindale, Ark based Tyson’s stock was $29.69 on Aug 5, representing a stellar return of 109.5% on a 1-year basis and 48.6% on a year-to-date basis. The company’s long-term estimated earnings growth rate is 11.6%. Average volume of shares traded over the last three months came in at approximately 3,955K

Strong Third Quarter Fiscal 2013 Results

Tyson’s third quarter adjusted earnings of 69 cents per share beat the Zacks Consensus Estimate and the prior-year quarter earnings by 17.0% and 35%, respectively. Earnings were on the upswing due to strong momentum in the Chicken and Beef segments and lower share count following share buybacks in the quarter.

Sales in the Chicken segment grew as consumers are becoming increasingly health conscious and are moving away from high calorie red meat toward the lower calorie chicken options. Moreover, the chicken items are less pricey than their red meat counterparts.

The Beef segment turned around during the quarter benefiting from a stable live cattle market and increased operational efficiencies in the beef producing plants.

Moreover, a sharp decline in corn prices following a record harvest in 2013 boosted margins in the quarter as corn serves as the main feed for chicken.

Further, Tyson has bright prospects the upcoming quarter with its constant focus on innovation which is expected to further improve profitability. Keeping in view the rising demand for nutritional products in the food items, Tyson has worked toward preparing its food items in compliance with the new dietary guidelines regarding the calorie and sodium limits.

Other Stocks to Consider

Tyson carries a Zacks Rank #2 (Buy). Other diversified consumer staples stocks worth considering include Pilgrims Pride Corp. (PPC - Snapshot Report), Dole Foods Co. and B&G Foods Inc. (BGS - Snapshot Report), all carrying a Zacks Rank #1 (Strong Buy).

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