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Tyson Foods (TSN) Down More Than 20% in 6 Months: Here's Why
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Tyson Foods, Inc. (TSN - Free Report) is operating amid tough market conditions with escalated costs. The renowned meat products company is battling hurdles in the Beef and Chicken segments. These downsides have been hurting the company’s profits as seen in the second quarter of fiscal 2023. Management also lowered its revenue guidance for fiscal 2023.
Shares of the Zacks Rank #5 (Strong Sell) company have declined 20.6% in the past six months compared with the industry’s decline of 15%. The company’s stock has lagged the Zacks Consumer Staples’s growth of 0.5% during this time.
Let’s discuss this in details.
Image Source: Zacks Investment Research
Weak Performance & Lowered View
In the second quarter of fiscal 2023, Tyson Foods’ adjusted loss of 4 cents per share, significantly declined from earnings of $2.29 reported in the year-ago period. Most of the decline in profits was led by reduced earnings in Beef and Chicken segments. Total sales were $13,133 million, almost flat with the year-ago quarter’s levels. Average price changes had a 3.2% adverse impact on the top line.
Management lowered its fiscal 2023 revenue guidance, thanks to consumers opting for alternatives amid the inflationary landscape. The company anticipates sales in the band of $53-$54 billion for fiscal 2023, suggesting growth of flat to 1%. Earlier, it expected sales in the range of $55-$57 billion.
Cost Woes Hurt Margin
In the second quarter of fiscal 2023, Tyson Foods’ gross profit came in at $527 million, down from the $1,735 million reported in the prior-year quarter. Gross profit, as a percentage of sales, came in at roughly 4%, down from 13.2% reported in the year-ago quarter. TSN’s adjusted operating margin contracted to 0.5% from the 8.9% reported in the year-ago quarter.
The company witnessed elevated input costs per pound in all segments, except pork. Most of this was a result of inflated costs of raw materials and labor. Apart from this, the company saw a decline in pricing due to lower outside meat purchases in chicken and slashed supply-chain costs.
What Else is Hurting Tyson Foods?
In the second quarter of fiscal 2023, sales in Tyson Foods’ Beef segment declined 8.3% to $4,617 million. The company continued to see increased live cattle costs due to reduced beef herd, which in turn restricted supply. For fiscal 2023, management expects beef segment margins in the range of a 1% loss and a 1% gain due to the deterioration of the current market scenario.
Although Chicken segment sales increased in the fiscal second quarter, the macro environment remained difficult. Commodity prices for chicken cuts were quite lower compared with the year-ago period’s levels. Prices of boneless breast meat, tenders and wings declined more than 50%. Further, the company saw a rise in feed ingredient costs. On its second-quarter earnings call, management stated that the key export markets remain closed due to the high-path avian influenza.
Final Thoughts
Tyson Foods’ is focused on core strategies like driving growth across the core protein platform and solidifying brand portfolio. The company is undertaking a number of operational and supply chain efficiency programs to place itself better in the long run. Management continues to accelerate digitalization via supply chain planning and execution processes to enhance customer service.
That being said, let’s see if these upsides can help TSN counter the hurdles mentioned above.
Some Better-Ranked Food Bets
Here we have highlighted three better-ranked stocks, namely TreeHouse Foods, Inc. (THS - Free Report) , Lamb Weston Holdings (LW - Free Report) and Celsius Holdings (CELH - Free Report) .
TreeHouse Foods, a manufacturer of packaged foods and beverages, currently sports a Zacks Rank #1 (Strong Buy). THS has a trailing four-quarter earnings surprise of 49.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TreeHouse Foods’ current financial-year’s sales suggests a decline of 12.4% from the year-ago reported numbers.
Lamb Weston, a leading supplier of frozen potato, sweet potato, appetizer and vegetable products to restaurants and retailers worldwide, flaunts a Zacks Rank #2 (Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year’s sales and earnings indicates growth of 29.6% and 117.3%, respectively, from the year-ago reported figures. The expected EPS growth rate for three to five years is 42.7%.
Celsius Holdings, which offers functional drinks and liquid supplements, carries a Zacks Rank #2 at present. CELH delivered an earnings surprise of 81.8% in the last reported quarter.
The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year’s sales and earnings implies surges of 69.6% and 154.4%, respectively, from the prior-year numbers.
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Tyson Foods (TSN) Down More Than 20% in 6 Months: Here's Why
Tyson Foods, Inc. (TSN - Free Report) is operating amid tough market conditions with escalated costs. The renowned meat products company is battling hurdles in the Beef and Chicken segments. These downsides have been hurting the company’s profits as seen in the second quarter of fiscal 2023. Management also lowered its revenue guidance for fiscal 2023.
Shares of the Zacks Rank #5 (Strong Sell) company have declined 20.6% in the past six months compared with the industry’s decline of 15%. The company’s stock has lagged the Zacks Consumer Staples’s growth of 0.5% during this time.
Let’s discuss this in details.
Image Source: Zacks Investment Research
Weak Performance & Lowered View
In the second quarter of fiscal 2023, Tyson Foods’ adjusted loss of 4 cents per share, significantly declined from earnings of $2.29 reported in the year-ago period. Most of the decline in profits was led by reduced earnings in Beef and Chicken segments. Total sales were $13,133 million, almost flat with the year-ago quarter’s levels. Average price changes had a 3.2% adverse impact on the top line.
Management lowered its fiscal 2023 revenue guidance, thanks to consumers opting for alternatives amid the inflationary landscape. The company anticipates sales in the band of $53-$54 billion for fiscal 2023, suggesting growth of flat to 1%. Earlier, it expected sales in the range of $55-$57 billion.
Cost Woes Hurt Margin
In the second quarter of fiscal 2023, Tyson Foods’ gross profit came in at $527 million, down from the $1,735 million reported in the prior-year quarter. Gross profit, as a percentage of sales, came in at roughly 4%, down from 13.2% reported in the year-ago quarter. TSN’s adjusted operating margin contracted to 0.5% from the 8.9% reported in the year-ago quarter.
The company witnessed elevated input costs per pound in all segments, except pork. Most of this was a result of inflated costs of raw materials and labor. Apart from this, the company saw a decline in pricing due to lower outside meat purchases in chicken and slashed supply-chain costs.
What Else is Hurting Tyson Foods?
In the second quarter of fiscal 2023, sales in Tyson Foods’ Beef segment declined 8.3% to $4,617 million. The company continued to see increased live cattle costs due to reduced beef herd, which in turn restricted supply. For fiscal 2023, management expects beef segment margins in the range of a 1% loss and a 1% gain due to the deterioration of the current market scenario.
Although Chicken segment sales increased in the fiscal second quarter, the macro environment remained difficult. Commodity prices for chicken cuts were quite lower compared with the year-ago period’s levels. Prices of boneless breast meat, tenders and wings declined more than 50%. Further, the company saw a rise in feed ingredient costs. On its second-quarter earnings call, management stated that the key export markets remain closed due to the high-path avian influenza.
Final Thoughts
Tyson Foods’ is focused on core strategies like driving growth across the core protein platform and solidifying brand portfolio. The company is undertaking a number of operational and supply chain efficiency programs to place itself better in the long run. Management continues to accelerate digitalization via supply chain planning and execution processes to enhance customer service.
That being said, let’s see if these upsides can help TSN counter the hurdles mentioned above.
Some Better-Ranked Food Bets
Here we have highlighted three better-ranked stocks, namely TreeHouse Foods, Inc. (THS - Free Report) , Lamb Weston Holdings (LW - Free Report) and Celsius Holdings (CELH - Free Report) .
TreeHouse Foods, a manufacturer of packaged foods and beverages, currently sports a Zacks Rank #1 (Strong Buy). THS has a trailing four-quarter earnings surprise of 49.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TreeHouse Foods’ current financial-year’s sales suggests a decline of 12.4% from the year-ago reported numbers.
Lamb Weston, a leading supplier of frozen potato, sweet potato, appetizer and vegetable products to restaurants and retailers worldwide, flaunts a Zacks Rank #2 (Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year’s sales and earnings indicates growth of 29.6% and 117.3%, respectively, from the year-ago reported figures. The expected EPS growth rate for three to five years is 42.7%.
Celsius Holdings, which offers functional drinks and liquid supplements, carries a Zacks Rank #2 at present. CELH delivered an earnings surprise of 81.8% in the last reported quarter.
The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year’s sales and earnings implies surges of 69.6% and 154.4%, respectively, from the prior-year numbers.