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Why Is Tyson (TSN) Up 2.6% Since Last Earnings Report?
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It has been about a month since the last earnings report for Tyson Foods (TSN - Free Report) . Shares have added about 2.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Tyson due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Tyson Foods Q4 Earnings Top Estimates, Sales Up Y/Y
Tyson Foods posted impressive fourth-quarter fiscal 2021 results, with the top and the bottom line increasing year over year. Sales and earnings surpassed the Zacks Consensus Estimate.
Quarter in Detail
Adjusted earnings came in at $2.30 per share, which beat the Zacks Consensus Estimate of $2.20. The bottom line rallied 35% year over year.
Total sales came in at $12,811 million, up 11.8% from $11,460 million reported in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $12,559.2 million. Gains from average price change were 22.5%, while total volumes declined 10.7%.
Gross profit in the quarter came in at $2,476 million, up from $1,610 million reported in the prior-year quarter. Gross profit, as a percentage of sales, came in at 19.3%, up from 14% reported in the year-ago quarter. Tyson Foods’ adjusted operating income increased 26% to $1,152 million. Adjusted operating margin expanded from 8.6% to 9% in the quarter.
Segment Details
Beef: Sales in the segment increased to $5,012 million from $4,272 million reported in the year-ago quarter. Volume declined 15.4% due to adverse impact related to challenging labor environment which was somewhat offset by solid global demand. Average price increased 32.7% on the back of input cost increases like live cattle, labor, freight and transportation costs as well as solid demand for beef products.
Pork: Sales in the segment increased to $1,646 million from $1,368 million reported in the year-ago quarter. Sales volume fell 17.7%,owing to reduced hog supplies and tough labor environment. These were somewhat offset by solid global demand. Average price increased 38% as input costs like live hog, labor, freight and transportation expenses increased along with solid pork products demand.
Chicken: Sales in the segment increased to $3,873 million from $3,433 million reported in the year-ago quarter. Sales volume declined 5.9% mainly due to higher demand in the foodservice channel. Average price increased 18.7% due to favorable sales mix and inflationary market conditions.
Prepared Foods: Sales in the segment fell to $2,253 million from $2,277 million reported in the year-ago quarter. Prepared Foods’ sales volume declined 12.5%, thanks to reduced production throughput stemming from tough labor and supply environment. Average price increased 11.4%, due to favorable product mix and inflation-justified pricing.
International/Other: Sales in the segment were $546 million, up from $491 million reported in the year-ago quarter. Sales volume moved up 3.2%, while average sales price jumped 8%.
Other Financial Updates
The company exited the quarter with cash and cash equivalents of $2,507 million, long-term debt of $8,281 million and total shareholders’ equity (including non-controlling interests) of $17,854 million. In 12 months ended Oct 2, 2021, cash provided by operating activities amounted to $3,840 million. Liquidity was $4.8 billion as of Oct 2, 2021. Management expects liquidity to remain more than the company’s minimum target of $1 billion. The company projects capital expenditures to be nearly of $2 billion for fiscal 2022.
Effective Nov 12, 2021, Tyson foods increased quarterly dividend earlier declared on Aug 12, 2021, to 46 cents per share on Class A common stock and 41.4 cents per share on Class B common stock, payable on Dec 15, 2021, to shareholders on record as of Dec 1, 2021. In addition, the company declared a dividend of 46 cents per share on Class A common stock and 41.4 cents per share on Class B common stock, payable on Mar 15, 2022, to shareholders record as of Mar 1, 2022. The company concluded the sale of Pet Treats business for $1.2 billion during the quarter.
Outlook
For fiscal 2022, the United States Department of Agriculture (“USDA”) projects domestic protein production (beef, pork, chicken and turkey) to improve slightly compared with fiscal 2021 levels. Starting from fiscal 2022, management is launching a new productivity program to drive better, faster and more agile organization. The company is projecting to achieve $1 billion in productivity savings by the end of fiscal 2024 and $300-$400 million in fiscal 2022, relative to a fiscal 2021 cost baseline. Management anticipates sales in the bracket of $49-$51 billion in fiscal 2022.
Segment-Wise Guidance for Fiscal 2022
For the Beef segment, USDA projects domestic production to decline nearly 2% year over year in fiscal 2022. For Pork, domestic production is projected to decline almost 2% year over year in fiscal 2022, per the USDA. USDA forecasts domestic production in the Chicken segment to improve slightly in fiscal 2022. The company expects better results from its operations in the International/Other segment.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 14.83% due to these changes.
VGM Scores
At this time, Tyson has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Tyson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Tyson (TSN) Up 2.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Tyson Foods (TSN - Free Report) . Shares have added about 2.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Tyson due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Tyson Foods Q4 Earnings Top Estimates, Sales Up Y/Y
Tyson Foods posted impressive fourth-quarter fiscal 2021 results, with the top and the bottom line increasing year over year. Sales and earnings surpassed the Zacks Consensus Estimate.
Quarter in Detail
Adjusted earnings came in at $2.30 per share, which beat the Zacks Consensus Estimate of $2.20. The bottom line rallied 35% year over year.
Total sales came in at $12,811 million, up 11.8% from $11,460 million reported in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $12,559.2 million. Gains from average price change were 22.5%, while total volumes declined 10.7%.
Gross profit in the quarter came in at $2,476 million, up from $1,610 million reported in the prior-year quarter. Gross profit, as a percentage of sales, came in at 19.3%, up from 14% reported in the year-ago quarter. Tyson Foods’ adjusted operating income increased 26% to $1,152 million. Adjusted operating margin expanded from 8.6% to 9% in the quarter.
Segment Details
Beef: Sales in the segment increased to $5,012 million from $4,272 million reported in the year-ago quarter. Volume declined 15.4% due to adverse impact related to challenging labor environment which was somewhat offset by solid global demand. Average price increased 32.7% on the back of input cost increases like live cattle, labor, freight and transportation costs as well as solid demand for beef products.
Pork: Sales in the segment increased to $1,646 million from $1,368 million reported in the year-ago quarter. Sales volume fell 17.7%,owing to reduced hog supplies and tough labor environment. These were somewhat offset by solid global demand. Average price increased 38% as input costs like live hog, labor, freight and transportation expenses increased along with solid pork products demand.
Chicken: Sales in the segment increased to $3,873 million from $3,433 million reported in the year-ago quarter. Sales volume declined 5.9% mainly due to higher demand in the foodservice channel. Average price increased 18.7% due to favorable sales mix and inflationary market conditions.
Prepared Foods: Sales in the segment fell to $2,253 million from $2,277 million reported in the year-ago quarter. Prepared Foods’ sales volume declined 12.5%, thanks to reduced production throughput stemming from tough labor and supply environment. Average price increased 11.4%, due to favorable product mix and inflation-justified pricing.
International/Other: Sales in the segment were $546 million, up from $491 million reported in the year-ago quarter. Sales volume moved up 3.2%, while average sales price jumped 8%.
Other Financial Updates
The company exited the quarter with cash and cash equivalents of $2,507 million, long-term debt of $8,281 million and total shareholders’ equity (including non-controlling interests) of $17,854 million. In 12 months ended Oct 2, 2021, cash provided by operating activities amounted to $3,840 million. Liquidity was $4.8 billion as of Oct 2, 2021. Management expects liquidity to remain more than the company’s minimum target of $1 billion. The company projects capital expenditures to be nearly of $2 billion for fiscal 2022.
Effective Nov 12, 2021, Tyson foods increased quarterly dividend earlier declared on Aug 12, 2021, to 46 cents per share on Class A common stock and 41.4 cents per share on Class B common stock, payable on Dec 15, 2021, to shareholders on record as of Dec 1, 2021. In addition, the company declared a dividend of 46 cents per share on Class A common stock and 41.4 cents per share on Class B common stock, payable on Mar 15, 2022, to shareholders record as of Mar 1, 2022. The company concluded the sale of Pet Treats business for $1.2 billion during the quarter.
Outlook
For fiscal 2022, the United States Department of Agriculture (“USDA”) projects domestic protein production (beef, pork, chicken and turkey) to improve slightly compared with fiscal 2021 levels. Starting from fiscal 2022, management is launching a new productivity program to drive better, faster and more agile organization. The company is projecting to achieve $1 billion in productivity savings by the end of fiscal 2024 and $300-$400 million in fiscal 2022, relative to a fiscal 2021 cost baseline. Management anticipates sales in the bracket of $49-$51 billion in fiscal 2022.
Segment-Wise Guidance for Fiscal 2022
For the Beef segment, USDA projects domestic production to decline nearly 2% year over year in fiscal 2022. For Pork, domestic production is projected to decline almost 2% year over year in fiscal 2022, per the USDA. USDA forecasts domestic production in the Chicken segment to improve slightly in fiscal 2022. The company expects better results from its operations in the International/Other segment.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 14.83% due to these changes.
VGM Scores
At this time, Tyson has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Tyson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.