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Is Tyson Foods (TSN) Poised for a Beat in Q2 Earnings?
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Tyson Foods, Inc. (TSN - Free Report) is set to report second-quarter fiscal 2017 results before the opening bell on May 8. The question lingering in investors’ minds is, whether this meat producer will be able to post a positive earnings surprise in the to-be-reported quarter. The company’s earnings exceeded the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 6.79%.
Let us see how things are shaping up for this announcement.
What Does the Zacks Model Unveil?
Our proven model shows that Tyson Foods is likely to beat earnings because it has the right combination of two key ingredients.
Zacks Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +3.77%. This is because the Most Accurate estimate is $1.10 per share, while the Zacks Consensus Estimate is pegged lower at $1.06. This is a very meaningful and leading indicator of a likely positive earnings surprise for shares. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Tyson Foods currently carries a Zacks Rank #2 (Buy). Note that stocks with Zacks Ranks #1 (Strong Buy), 2 and 3 (Hold) have a significantly higher chance of beating earnings. The sell rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Tyson Foods’ Zacks Rank #2 and an Earnings ESP of +3.77% makes us very optimistic about a possible earnings beat.
Which Way are Estimates Treading?
Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company right before earnings release. The Zacks Consensus Estimate of $1.06 for the second quarter has declined in the last seven days and reflects a year-over-year decline of 1.25%. However, the Zacks Consensus Estimate of $5.05 for fiscal 2017 has increased over the same time frame, reflecting a year-over-year growth of 15.1%. Further, analysts polled by Zacks expect revenues of $9.10 billion for the said quarter, down 0.76% from the year-ago period.
Tyson Foods, Inc. Price, Consensus and EPS Surprise
Tyson deals in beef, pork, and chicken as well as processed foods. Chicken nuggets, chicken sandwiches, wings, meatball sandwiches and bone-in chicken have been witnessing higher growth for the past few years, as an increasing number of health-conscious consumers are opting for chicken instead of red meat due to the associated health risks.Moreover, with consumers choosing to avoid high-priced beef, demand for chicken is scaling higher. The company is also focusing on providing meat-based snacks to consumers who are refraining from purchasing candy and overly processed foods. Tyson’s food categories are in high demand at present at the national foodservice chains. Further, the company is set to make significant investments in order to improve the supply network within the food-service channel. The investments are expected to translate into improved efficiency and volume growth in the near term, though it will also increase the company’s costs.
Tyson has also been focusing on acquisitions to expand its portfolio. The recent acquisition of AdvancePierre Foods will enable Tyson to grow in the fastest growing portfolio of protein packed brands and expand its fresh prepared foods offering for both out-of-home and in-home eating occasions.
Though the strong performance of Core 9 categories and foodservice top-tier offerings continue to outperform the industry, the sluggish beef and pork segment remains a concern. Moreover, the company’s exports have been hurt in the past few quarters due to macroeconomic headwinds.
Tyson Foods’ stock declined 9.7% in the past six months,wider than the Food-Meat Products industry’s decline of 2.1%. Notably, the industry is part of the top 8% of the Zacks Classified industries (22 out of the 265). The broader Consumer Staples sector is placed at bottom 38% of the Zacks Classified sectors (10 out of 16).
Stocks to Consider
Here are some companies in the Consumer Staple sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Dean Foods Company has an Earnings ESP of +5.88% and a Zacks Rank #3.
Post Holdings, Inc. (POST - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank #3.
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Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Is Tyson Foods (TSN) Poised for a Beat in Q2 Earnings?
Tyson Foods, Inc. (TSN - Free Report) is set to report second-quarter fiscal 2017 results before the opening bell on May 8. The question lingering in investors’ minds is, whether this meat producer will be able to post a positive earnings surprise in the to-be-reported quarter. The company’s earnings exceeded the Zacks Consensus Estimate in three of the trailing four quarters, with an average beat of 6.79%.
Let us see how things are shaping up for this announcement.
What Does the Zacks Model Unveil?
Our proven model shows that Tyson Foods is likely to beat earnings because it has the right combination of two key ingredients.
Zacks Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +3.77%. This is because the Most Accurate estimate is $1.10 per share, while the Zacks Consensus Estimate is pegged lower at $1.06. This is a very meaningful and leading indicator of a likely positive earnings surprise for shares. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Tyson Foods currently carries a Zacks Rank #2 (Buy). Note that stocks with Zacks Ranks #1 (Strong Buy), 2 and 3 (Hold) have a significantly higher chance of beating earnings. The sell rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Tyson Foods’ Zacks Rank #2 and an Earnings ESP of +3.77% makes us very optimistic about a possible earnings beat.
Which Way are Estimates Treading?
Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company right before earnings release. The Zacks Consensus Estimate of $1.06 for the second quarter has declined in the last seven days and reflects a year-over-year decline of 1.25%. However, the Zacks Consensus Estimate of $5.05 for fiscal 2017 has increased over the same time frame, reflecting a year-over-year growth of 15.1%. Further, analysts polled by Zacks expect revenues of $9.10 billion for the said quarter, down 0.76% from the year-ago period.
Tyson Foods, Inc. Price, Consensus and EPS Surprise
Tyson Foods, Inc. Price, Consensus and EPS Surprise | Tyson Foods, Inc. Quote
Factors Influencing the Quarter
Tyson deals in beef, pork, and chicken as well as processed foods. Chicken nuggets, chicken sandwiches, wings, meatball sandwiches and bone-in chicken have been witnessing higher growth for the past few years, as an increasing number of health-conscious consumers are opting for chicken instead of red meat due to the associated health risks.Moreover, with consumers choosing to avoid high-priced beef, demand for chicken is scaling higher. The company is also focusing on providing meat-based snacks to consumers who are refraining from purchasing candy and overly processed foods. Tyson’s food categories are in high demand at present at the national foodservice chains. Further, the company is set to make significant investments in order to improve the supply network within the food-service channel. The investments are expected to translate into improved efficiency and volume growth in the near term, though it will also increase the company’s costs.
Tyson has also been focusing on acquisitions to expand its portfolio. The recent acquisition of AdvancePierre Foods will enable Tyson to grow in the fastest growing portfolio of protein packed brands and expand its fresh prepared foods offering for both out-of-home and in-home eating occasions.
Though the strong performance of Core 9 categories and foodservice top-tier offerings continue to outperform the industry, the sluggish beef and pork segment remains a concern. Moreover, the company’s exports have been hurt in the past few quarters due to macroeconomic headwinds.
Tyson Foods’ stock declined 9.7% in the past six months,wider than the Food-Meat Products industry’s decline of 2.1%. Notably, the industry is part of the top 8% of the Zacks Classified industries (22 out of the 265). The broader Consumer Staples sector is placed at bottom 38% of the Zacks Classified sectors (10 out of 16).
Stocks to Consider
Here are some companies in the Consumer Staple sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Energizer Holdings, Inc. (ENR - Free Report) has an Earnings ESP of +5.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dean Foods Company has an Earnings ESP of +5.88% and a Zacks Rank #3.
Post Holdings, Inc. (POST - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank #3.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>