Tyson Foods, Inc. ( TSN Quick Quote TSN - Free Report) has been focused on undertaking expansion to strengthen its portfolio. The company concluded the previously unveiled acquisition of Williams Sausage Company, Inc. The move is likely to solidify Tyson Foods’ product portfolio and manufacturing capacity. Williams Sausage Company offers meat products, and its brand strength, impressive facilities and direct store delivery network are likely to complement Tyson Foods’ Prepared Foods business. In the second quarter of fiscal 2023, sales in the Prepared Foods segment rose to $2,422 million from the $2,393 million reported in the year-ago quarter. While volumes dipped 0.4%, the average price increased 1.6%. What Else to Know?
Tyson Foods has been benefiting from strategic growth efforts, such as a focus on protein-packed brands and capacity expansion. The company is focused on catering to consumers’ steady protein demand despite rising inflation. For fiscal 2023, the United States Department of Agriculture (“USDA”) projects domestic protein production (beef, pork, chicken and turkey) to increase slightly from the fiscal 2022 level.
Tyson Foods has been undertaking many operational and supply-chain efficiency programs to place itself better in the long run. In this regard, the company has been investing in capacity expansion and automation technology investments. Tyson Foods continues to accelerate digitalization via supply-chain planning and execution processes to enhance customer service. Management is optimizing its plant network by adding fully cooked capacity, converting plants for value-added production, executing plant flexibility and enhancing the portfolio mix. However, TSN has been seeing soft margins for a while. In the second quarter, the gross profit in the quarter came in at $527 million, down from the $1,735 million reported in the prior-year quarter. The gross profit, as a percentage of sales, came in at roughly 4%, down from the 13.2% reported in the year-ago quarter. Tyson Foods’ adjusted operating income plunged 94% to $65 million. The adjusted operating margin contracted to 0.5% from the 8.9% reported in the year-ago quarter. Starting fiscal 2022, management launched a productivity program to drive a better, faster and more agile organization. The company generated productivity savings of more than $700 million in fiscal 2022 and already exceeded its aggregate target of $1 billion by the end of the second quarter of fiscal 2023, a year ahead of its schedule. A Look Ahead
This Zacks Rank #3 (Hold) company anticipates sales in the band of $53-$54 billion for fiscal 2023. For the Beef segment, the USDA projects domestic production to fall 4% year over year. For Pork, domestic production is projected to remain nearly flat.
Per USDA forecasts, production in the Chicken segment is likely to improve by nearly 3% in fiscal 2023. For the fiscal, the company expects better results from its foreign operations in the International/Other segment. Shares of TSN have declined 14.4% in the past three months compared with the industry’s decline of 13.5%. Solid Food Picks
Some better-ranked food stocks are
Lamb Weston ( LW Quick Quote LW - Free Report) , General Mills ( GIS Quick Quote GIS - Free Report) and Conagra Brands ( CAG Quick Quote CAG - Free Report) . Lamb Weston, which operates as a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year EPS suggests an increase of 116.8% from the year-ago reported number. General Mills, a food and beverage product company, currently has a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average. The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the year-ago reported figures. Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average. The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests increases of 7.1% and 16.5%, respectively, from the year-ago reported numbers.