Tyson Foods, Inc. (TSN - Free Report) posted better-than-expected third-quarter fiscal 2017 results, wherein both earnings and sales surpassed the Zacks Consensus Estimate. The company reported adjusted earnings of $1.28 per share that came a penny ahead of the estimate and increased 6% year over year. The results mainly benefitted from the strong performance of its segments, primarily Beef and Chicken.
Following the results, Tyson Foods’ shares were up roughly 3% during pre-market trading hours. We note that in the past three months, the stock improved 6.4% compared with the industry’s growth of 3.8%. Notably, the industry is part of the top 4% of the Zacks Classified industries (10 out of the 256). The broader Consumer Staples sector is placed at the top 13% of the Zacks Classified sectors (2 out of 16).
Revenues and Margins
Net sales increased 4.8% to $9.85 billion primarily due to improvement across all its food segments and beat the Zacks Consensus Estimate of $9.48 billion. Sales volume increased 0.5%, while average sales price (ASP) inched up 4.2%.
Tyson Foods' adjusted operating income declined 1.4% to $756 million due to higher operating costs. Adjusted operating margin contracted 50 basis points (bps) to 7.7%.
Segment Details
Chicken: Sales for the segment came in at $2.9 billion. Sales volume increased 1.6% year over year owing to higher demand for chicken products. Average sales price for the quarter increased 2.9% due to change in sales mix. However, adjusted operating margin declined 350 bps to 10.4% due to higher operating costs.
Beef: Sales for the segment came in at $4 billion. Sales volume rose 0.4% year over year, owing to robust domestic demand for beef products, improved availability of cattle supply and higher exports.These factors positively impacted the average sales price, which increased 5.3%. Adjusted operating margin expanded 130 basis points to 3.7% on the back of favorable market conditions.
Pork: Sales for the segment came in at $1.3 billion. The segment’s sales volume grew 0.6% year over year driven by enhanced exports as well as strurdy demand for pork products. Average sales price increased 3.3%, while adjusted operating margin increased 70 bps to 10.3%, gaining from live hog markets.
Prepared Foods: Sales for the segment came in at $1.9 billion. Prepared Foods’ sales volume grew 2.4% due to incremental volumes arising from the buyout of AdvancePierre. These were partly offset by fall in food service. Average sales price was up 4.9% due to favorable product mix arising from the acquisition of AdvancePierre. Adjusted operating margin contracted 90 bps to 10% due to higher operating costs.
Other: Sales for the segment came in at $85 million, while volume declined 11.9%. The segment incurred operating loss of $20 million compared with the loss of $23 million in the year-ago period.
Other Financial Update
Tyson Foods, which carries a Zacks Rank #3 (Hold), ended the quarter with a cash and cash equivalent of $231 million, long-term debt of $9.8 billion and shareholders’ equity of $10.1 billion. Further, management projects capital expenditures to be approximately $1 billion for fiscal 2017.
Guidance
For fiscal 2017, Tyson anticipates sales to be over $38 billion, as the company is hopeful regarding improving volumes across all its segments. For Fiscal 2018, it anticipates sales to increase to $41 billion. Tyson Foods envisions fiscal 2017 earnings in the range of $4.95-$5.05 per share, reflecting an increase of 13% year over year. The Zacks Consensus Estimate for the fiscal year is currently pegged at $5.19.
For fiscal 2018, USDA expects overall domestic protein production (chicken, beef, pork and turkey) to increase roughly 3-4% year over year. The company expects to realize synergies of over $200 million by fiscal 2020 from the recent buyout of AdvancePierre (acquisition completed on Jun 7).
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Constellation Brands has an average positive earnings surprise of 11.7% over the past four quarters. It has a long-term earnings growth rate of 18.2%.
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Tyson Foods, Inc. (TSN - Free Report) posted better-than-expected third-quarter fiscal 2017 results, wherein both earnings and sales surpassed the Zacks Consensus Estimate. The company reported adjusted earnings of $1.28 per share that came a penny ahead of the estimate and increased 6% year over year. The results mainly benefitted from the strong performance of its segments, primarily Beef and Chicken.
Following the results, Tyson Foods’ shares were up roughly 3% during pre-market trading hours. We note that in the past three months, the stock improved 6.4% compared with the industry’s growth of 3.8%. Notably, the industry is part of the top 4% of the Zacks Classified industries (10 out of the 256). The broader Consumer Staples sector is placed at the top 13% of the Zacks Classified sectors (2 out of 16).
Revenues and Margins
Net sales increased 4.8% to $9.85 billion primarily due to improvement across all its food segments and beat the Zacks Consensus Estimate of $9.48 billion. Sales volume increased 0.5%, while average sales price (ASP) inched up 4.2%.
Tyson Foods' adjusted operating income declined 1.4% to $756 million due to higher operating costs. Adjusted operating margin contracted 50 basis points (bps) to 7.7%.
Segment Details
Chicken: Sales for the segment came in at $2.9 billion. Sales volume increased 1.6% year over year owing to higher demand for chicken products. Average sales price for the quarter increased 2.9% due to change in sales mix. However, adjusted operating margin declined 350 bps to 10.4% due to higher operating costs.
Beef: Sales for the segment came in at $4 billion. Sales volume rose 0.4% year over year, owing to robust domestic demand for beef products, improved availability of cattle supply and higher exports.These factors positively impacted the average sales price, which increased 5.3%. Adjusted operating margin expanded 130 basis points to 3.7% on the back of favorable market conditions.
Pork: Sales for the segment came in at $1.3 billion. The segment’s sales volume grew 0.6% year over year driven by enhanced exports as well as strurdy demand for pork products. Average sales price increased 3.3%, while adjusted operating margin increased 70 bps to 10.3%, gaining from live hog markets.
Prepared Foods: Sales for the segment came in at $1.9 billion. Prepared Foods’ sales volume grew 2.4% due to incremental volumes arising from the buyout of AdvancePierre. These were partly offset by fall in food service. Average sales price was up 4.9% due to favorable product mix arising from the acquisition of AdvancePierre. Adjusted operating margin contracted 90 bps to 10% due to higher operating costs.
Other: Sales for the segment came in at $85 million, while volume declined 11.9%. The segment incurred operating loss of $20 million compared with the loss of $23 million in the year-ago period.
Other Financial Update
Tyson Foods, which carries a Zacks Rank #3 (Hold), ended the quarter with a cash and cash equivalent of $231 million, long-term debt of $9.8 billion and shareholders’ equity of $10.1 billion. Further, management projects capital expenditures to be approximately $1 billion for fiscal 2017.
Guidance
For fiscal 2017, Tyson anticipates sales to be over $38 billion, as the company is hopeful regarding improving volumes across all its segments. For Fiscal 2018, it anticipates sales to increase to $41 billion. Tyson Foods envisions fiscal 2017 earnings in the range of $4.95-$5.05 per share, reflecting an increase of 13% year over year. The Zacks Consensus Estimate for the fiscal year is currently pegged at $5.19.
For fiscal 2018, USDA expects overall domestic protein production (chicken, beef, pork and turkey) to increase roughly 3-4% year over year. The company expects to realize synergies of over $200 million by fiscal 2020 from the recent buyout of AdvancePierre (acquisition completed on Jun 7).
Do Consumer Staples Stocks Interest You? Check These
Investors may consider better-ranked stocks from the same sector such as Inter Parfums, Inc. (IPAR - Free Report) , Nu Skin Enterprises, Inc. (NUS - Free Report) and Constellation Brands, Inc. (STZ - Free Report) all carrying a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inter Parfums has an average positive earnings surprise of 15.6% over the past four quarters. It has a long-term earnings growth rate of 12.3%.
Nu Skin has an average positive earnings surprise of 10.8% % over the past four quarters. It has a long-term earnings growth rate of 8.7%.
Constellation Brands has an average positive earnings surprise of 11.7% over the past four quarters. It has a long-term earnings growth rate of 18.2%.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure.
See these buy recommendations now >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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