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Tyson Foods (TSN) Rallies More Than 20% in a year: Here's Why
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Tyson Foods, Inc. (TSN - Free Report) is well placed on solid demand in the retail channel amid pandemic-induced elevated at-home consumption. The company’s robust growth efforts, like focus on protein-packed brands and efficiency-building endeavors, are driving growth.
Currently, the Zacks Consensus Estimate for fiscal 2021 sales and earnings project year-over-year growth of 3.6% and 10.3%, respectively. The Zacks Rank #2 (Buy) company’s shares have rallied 23.4% in a year compared with the industry’s growth of 13.3%. The stock has also comfortably outperformed the Zacks Consumer Staples sector’s increase of 18.3% during the same period.
Retail Channel Gains on Higher Demand
Tyson Foods has been enjoying robust growth in the retail business amid the pandemic. The company delivered growth in the retail channel across all segments in second-quarter fiscal 2021. Retail contributed $700 million to overall sales improvement during the first half and more than $260 million in fiscal second quarter. In fact, strong retail sales were an upside to the company’s overall quarterly results, with the top and the bottom line increasing year over year as well as surpassing the Zacks Consensus Estimate.
In the second half of the year, the company expects to witness elevated demand in retail with volumes continuing to surpass pre-pandemic levels in Prepared Foods. Management also anticipates sequential improvement in foodservice in the second half. To this end, away-from-home traffic is increasing sequentially owing to vaccine rollouts and improvement in consumer mobility.
Image Source: Zacks Investment Research
Focus on Protein-Packed Brands
Tyson Foods is focused on higher protein production to cater to rising demand for protein-packed food. The company boasts a rich portfolio of protein-packed brands that are growing rapidly across the globe. It has also undertaken divesture of non-protein businesses (such as Sara Lee Frozen Bakery, Kettle and Van’s) to focus more on the growing protein-packed food arena.
The company has been steadily expanding fresh prepared foods offering, owing to consumers’ preference for natural fresh meat offerings without any added hormones or antibiotics. In recent developments, Tyson Foods announced that it is rolling out a range of plant-based products in chosen retail markets and digital platforms in Asia Pacific under First Pride brand. The introduction of plant-based alternatives in the region brings Tyson Foods closer to its objective of building an impressive portfolio of plant protein brands. In January 2021, the company launched new alternative protein offerings under the Jimmy Dean Label.
Measures to Boost Efficiency
Tyson Foods is undertaking a number of operational and supply chain efficiency programs to place itself for the long run. The company is committed toward capacity expansion and automation technology investments. Its Humboldt production facility in Tennessee has recently started operations. Tyson Foods is strengthening its case-ready meats business by reusing its plant capacity in South Carolina. Further, Tyson Foods is on track to expand capacity in its international operations. Management is constantly looking for ways to improve cost structure as well as enhance operations and customer service.
Strategic Acquisitions: Key Driver
Tyson Foods has been focusing on acquisitions to expand portfolio and boost sales volumes. The company completed the acquisition of the European and Thai operations of BRF S.A. in June 2019. The buyout strengthened Tyson Foods’ footing in the Thai poultry space as well as expanded presence in the U.K. and Netherlands. On Nov 30, 2018, the company acquired Keystone Foods business, which supplies a broad array of meat and chicken products internationally. This buyout has been bolstering the company’s Chicken as well as the International and Other segments' performances.
All said, we believe that Tyson Foods’ efforts to undertake prudent acquisitions coupled with the aforementioned upsides are likely to help it stay in investors’ good books.
Image: Shutterstock
Tyson Foods (TSN) Rallies More Than 20% in a year: Here's Why
Tyson Foods, Inc. (TSN - Free Report) is well placed on solid demand in the retail channel amid pandemic-induced elevated at-home consumption. The company’s robust growth efforts, like focus on protein-packed brands and efficiency-building endeavors, are driving growth.
Currently, the Zacks Consensus Estimate for fiscal 2021 sales and earnings project year-over-year growth of 3.6% and 10.3%, respectively. The Zacks Rank #2 (Buy) company’s shares have rallied 23.4% in a year compared with the industry’s growth of 13.3%. The stock has also comfortably outperformed the Zacks Consumer Staples sector’s increase of 18.3% during the same period.
Retail Channel Gains on Higher Demand
Tyson Foods has been enjoying robust growth in the retail business amid the pandemic. The company delivered growth in the retail channel across all segments in second-quarter fiscal 2021. Retail contributed $700 million to overall sales improvement during the first half and more than $260 million in fiscal second quarter. In fact, strong retail sales were an upside to the company’s overall quarterly results, with the top and the bottom line increasing year over year as well as surpassing the Zacks Consensus Estimate.
In the second half of the year, the company expects to witness elevated demand in retail with volumes continuing to surpass pre-pandemic levels in Prepared Foods. Management also anticipates sequential improvement in foodservice in the second half. To this end, away-from-home traffic is increasing sequentially owing to vaccine rollouts and improvement in consumer mobility.
Image Source: Zacks Investment Research
Focus on Protein-Packed Brands
Tyson Foods is focused on higher protein production to cater to rising demand for protein-packed food. The company boasts a rich portfolio of protein-packed brands that are growing rapidly across the globe. It has also undertaken divesture of non-protein businesses (such as Sara Lee Frozen Bakery, Kettle and Van’s) to focus more on the growing protein-packed food arena.
The company has been steadily expanding fresh prepared foods offering, owing to consumers’ preference for natural fresh meat offerings without any added hormones or antibiotics. In recent developments, Tyson Foods announced that it is rolling out a range of plant-based products in chosen retail markets and digital platforms in Asia Pacific under First Pride brand. The introduction of plant-based alternatives in the region brings Tyson Foods closer to its objective of building an impressive portfolio of plant protein brands. In January 2021, the company launched new alternative protein offerings under the Jimmy Dean Label.
Measures to Boost Efficiency
Tyson Foods is undertaking a number of operational and supply chain efficiency programs to place itself for the long run. The company is committed toward capacity expansion and automation technology investments. Its Humboldt production facility in Tennessee has recently started operations. Tyson Foods is strengthening its case-ready meats business by reusing its plant capacity in South Carolina. Further, Tyson Foods is on track to expand capacity in its international operations. Management is constantly looking for ways to improve cost structure as well as enhance operations and customer service.
Strategic Acquisitions: Key Driver
Tyson Foods has been focusing on acquisitions to expand portfolio and boost sales volumes. The company completed the acquisition of the European and Thai operations of BRF S.A. in June 2019. The buyout strengthened Tyson Foods’ footing in the Thai poultry space as well as expanded presence in the U.K. and Netherlands. On Nov 30, 2018, the company acquired Keystone Foods business, which supplies a broad array of meat and chicken products internationally. This buyout has been bolstering the company’s Chicken as well as the International and Other segments' performances.
All said, we believe that Tyson Foods’ efforts to undertake prudent acquisitions coupled with the aforementioned upsides are likely to help it stay in investors’ good books.
More Solid Food Picks
Darling Ingredients Inc. (DAR - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 29.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Medifast, Inc. (MED - Free Report) , currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 12.7%, on average.
Conagra Brands, Inc. (CAG - Free Report) , currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 11.5%, on average.