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What Must You Know Ahead of Tyson Foods' (TSN) Q3 Earnings?

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Tyson Foods, Inc. (TSN - Free Report) is likely to register top-line growth when it reports third-quarter fiscal 2023 earnings on Aug 7.

The Zacks Consensus Estimate for revenues is pegged at $13,776 million, suggesting 2.1% growth from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for the bottom line has declined by 8.1% to 34 cents per share over the past 30 days. The projection indicates a decrease of 82.5% from the figure reported in the year-ago period quarter. The meat product company has a trailing four-quarter negative earnings surprise of 36.1%, on average.

Factors to Consider

Tyson Foods has been benefiting from its focus on three main pillars. These include driving growth across the core protein platform. The company expects global demand for protein to continue rising and remains well-placed to cater to it.

Tyson Foods, Inc. Price, Consensus and EPS Surprise

Tyson Foods, Inc. Price, Consensus and EPS Surprise

Tyson Foods, Inc. price-consensus-eps-surprise-chart | Tyson Foods, Inc. Quote

Next, TSN aims to fuel growth through its robust brands, which include more than 30 prepared food and snacking brands. Thirdly, Tyson Foods is focused on prudent international expansion. It expects most of the protein consumption growth to take place outside the United States. The company is focused on making the most of this opportunity by scaling its existing business, strengthening its customer base and exploring new markets.

The United States Department of Agriculture (“USDA”) projects fiscal 2023 domestic protein production (beef, pork, chicken and turkey) to increase slightly from the fiscal 2022 level. For the fiscal, the company expects better results from its foreign operations in the International/Other segment. These aspects, together with Tyson Foods’ measures to boost efficiency, bode well for the quarter under review.

However, softness in the Beef segment is a concern. In the second quarter of fiscal 2023, sales in the Beef segment declined 8.3% to $4,617 million. Volumes dropped 2.9% due to reduced head processed, and the average price fell 5.4% owing to lower domestic demand and weaker export markets. 

For the Beef segment, the USDA projects domestic production to fall 4% year over year in fiscal 2023. Also, management expects Beef segment margins between a 1% loss and a 1% gain due to the deterioration of the current market scenario. These factors raise concerns for the third quarter as well. The Zacks Consensus Estimate for third-quarter sales for the Beef segment currently stands at $4,175 million compared with $4,366 million reported in the year-ago period.

Increased input costs also remain a downside. Incidentally, Tyson Foods witnessed elevated input costs per pound in most segments in the last reported quarter, mainly due to the inflated costs of raw materials and labor.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Tyson Foods this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here.

Tyson Foods has an Earnings ESP of -41.18% and a Zacks Rank #5 (Strong Sell). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Coty (COTY - Free Report) currently has an Earnings ESP of +20.00% and a Zacks Rank #2. The company’s top and bottom lines are expected to increase year over year when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for Coty’s quarterly revenues is pegged at $1.3 billion, which implies a rise of 13.4% from the figure reported in the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here

The Zacks Consensus Estimate for the quarterly EPS is pegged at 2 cents, which indicates 300% growth from the year-ago period figure. COTY has a trailing four-quarter earnings surprise of 145%, on average.

Celsius Holdings, Inc. (CELH - Free Report) currently has an Earnings ESP of +28.33% and a Zacks Rank #3. The company’s top and bottom lines are expected to increase year over year when it reports second-quarter 2023 results. The Zacks Consensus Estimate for Celsius Holdings’ quarterly revenues is pegged at $281.1 million, calling for growth of 82.5% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for the quarterly EPS is pegged at 30 cents, indicating an improvement from 12 cents reported in the year-ago quarter. CELH had an earnings surprise of 81.8% in the last reported quarter.

Hormel Foods (HRL - Free Report) currently has an Earnings ESP of +0.99% and a Zacks Rank #3. The company’s top and bottom lines are expected to increase year over year when it reports third-quarter fiscal 2023 results. The Zacks Consensus Estimate for Hormel Foods’ quarterly revenues is pegged at $3.1 billion, which implies a rise of 2.8% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for the quarterly EPS is pegged at 41 cents, which indicates a 2.5% jump from the year-ago period figure. HRL has a trailing four-quarter negative earnings surprise of 2.3%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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