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Tyson (TSN) Up 5.1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Tyson Foods (TSN - Free Report) . Shares have added about 5.1% 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 catalysts.
Tyson Foods posted mixed results for fourth-quarter fiscal 2023, with the top line lagging the Zacks Consensus Estimate, while the bottom line beat the same. Earnings and sales declined year over year on tough market dynamics. The company has posted adjusted earnings of 37 cents per share, beating the Zacks Consensus Estimate of earnings of 33 cents per share. The bottom line significantly declined from earnings of $1.63 per share reported in the year-ago period.
Quarter in Detail
Total sales were $13,348 million, down 2.8% from the year-ago quarter figure. The top line lagged the Zacks Consensus Estimate of $13,706 million. Average price changes had a 1.4% adverse impact on the top line, while total volumes dipped 0.6%.
The gross profit in the quarter was $459 million, down from the $1,307 million reported in the prior-year quarter. As a percentage of sales, the gross profit was 3.4%, down from the 9.5% reported in the year-ago quarter. Tyson Foods’ adjusted operating income plunged 71.3% to $236 million. The adjusted operating margin contracted to 1.8% from the 6% reported in the year-ago quarter.
Segmental Details
Beef: Sales in the segment declined to $5,029 million from the $4,859 million reported in the year-ago quarter. Volumes dropped 6.7% and the average price increased 10.2% in the segment.
Pork: Sales in the segment fell to $1,494 million from the $1,604 million reported in the year-ago quarter. Volumes dipped 0.2%, while the average price tumbled 6.7%.
Chicken: Sales in the segment decreased to $4,155 million from the $4,619 million reported in the year-ago quarter. Sales volumes rose 1.7% and the average price decreased 9.2%.
Prepared Foods: Sales in the segment fell to $2,502 million from the $2,516 million reported in the year-ago quarter. Prepared Foods’ sales volumes inched up 1% and the average price decreased 1.6%.
International/Other: Sales in the segment were $636 million, down from the $638 million reported in the year-ago quarter. Volumes jumped 4.9% and the average sales price fell 5.2%.
Other Financial Updates
The company exited the quarter with cash and cash equivalents of $573 million, long-term debt of $7,611 million and total shareholders’ equity (including non-controlling interests) of $18,255 million. For the fiscal year, cash provided by operating activities amounted to $1,752 million. Liquidity was about $3 billion as of Sep 30, 2023. Management expects liquidity to exceed the company’s minimum target of $1 billion.
Effective Nov 10, 2023, the company’s board increased the quarterly dividend earlier declared on Aug 10, 2023,to $0.49 per share on its Class A common stock and $0.441 per share on its Class B common stock. This dividend is payable on Dec 15, 2023, to shareholders of record as of Dec 1, 2023. The company’s board also declared a quarterly dividend of $0.49 per share on its Class A common stock and $0.441 per share on its Class B common stock, payable on Mar 15, 2024, to shareholders of record as of March 1. Management expects the balance quarterly dividends in fiscal 2024 to be $0.49 and $0.441 per share of its Class A and Class B common stock, respectively.
Tyson Foods projects capital expenditure to be nearly $1-$1.5 billion for fiscal 2024. These include expenditures related to capacity expansion, automation, and product and brand innovation.
Guidance
For fiscal 2024, the United States Department of Agriculture (“USDA”) projects domestic protein production for beef to decline 5% versus fiscal 2023. For pork, USDA projects domestic production to jump 2% from fiscal 2023. For chicken, USDA expects projects domestic protein production to rise slightly from fiscal 2023. Management anticipates improved results from the company’s foreign operations during fiscal 2024. Revenues are projected to be relatively flat in fiscal 2024 versus fiscal 2023. It forecasts adjusted operating income to be $1-$1.5 billion for fiscal 2024. Net interest expenses are expected to be $400 million. The adjusted tax rate is likely to be nearly 23% in fiscal 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -48.2% due to these changes.
VGM Scores
At this time, Tyson has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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Tyson (TSN) Up 5.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Tyson Foods (TSN - Free Report) . Shares have added about 5.1% 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 catalysts.
Tyson Foods Q4 Earnings Beat Estimates, Sales Dip Y/Y
Tyson Foods posted mixed results for fourth-quarter fiscal 2023, with the top line lagging the Zacks Consensus Estimate, while the bottom line beat the same. Earnings and sales declined year over year on tough market dynamics. The company has posted adjusted earnings of 37 cents per share, beating the Zacks Consensus Estimate of earnings of 33 cents per share. The bottom line significantly declined from earnings of $1.63 per share reported in the year-ago period.
Quarter in Detail
Total sales were $13,348 million, down 2.8% from the year-ago quarter figure. The top line lagged the Zacks Consensus Estimate of $13,706 million. Average price changes had a 1.4% adverse impact on the top line, while total volumes dipped 0.6%.
The gross profit in the quarter was $459 million, down from the $1,307 million reported in the prior-year quarter. As a percentage of sales, the gross profit was 3.4%, down from the 9.5% reported in the year-ago quarter. Tyson Foods’ adjusted operating income plunged 71.3% to $236 million. The adjusted operating margin contracted to 1.8% from the 6% reported in the year-ago quarter.
Segmental Details
Beef: Sales in the segment declined to $5,029 million from the $4,859 million reported in the year-ago quarter. Volumes dropped 6.7% and the average price increased 10.2% in the segment.
Pork: Sales in the segment fell to $1,494 million from the $1,604 million reported in the year-ago quarter. Volumes dipped 0.2%, while the average price tumbled 6.7%.
Chicken: Sales in the segment decreased to $4,155 million from the $4,619 million reported in the year-ago quarter. Sales volumes rose 1.7% and the average price decreased 9.2%.
Prepared Foods: Sales in the segment fell to $2,502 million from the $2,516 million reported in the year-ago quarter. Prepared Foods’ sales volumes inched up 1% and the average price decreased 1.6%.
International/Other: Sales in the segment were $636 million, down from the $638 million reported in the year-ago quarter. Volumes jumped 4.9% and the average sales price fell 5.2%.
Other Financial Updates
The company exited the quarter with cash and cash equivalents of $573 million, long-term debt of $7,611 million and total shareholders’ equity (including non-controlling interests) of $18,255 million. For the fiscal year, cash provided by operating activities amounted to $1,752 million. Liquidity was about $3 billion as of Sep 30, 2023. Management expects liquidity to exceed the company’s minimum target of $1 billion.
Effective Nov 10, 2023, the company’s board increased the quarterly dividend earlier declared on Aug 10, 2023,to $0.49 per share on its Class A common stock and $0.441 per share on its Class B common stock. This dividend is payable on Dec 15, 2023, to shareholders of record as of Dec 1, 2023. The company’s board also declared a quarterly dividend of $0.49 per share on its Class A common stock and $0.441 per share on its Class B common stock, payable on Mar 15, 2024, to shareholders of record as of March 1. Management expects the balance quarterly dividends in fiscal 2024 to be $0.49 and $0.441 per share of its Class A and Class B common stock, respectively.
Tyson Foods projects capital expenditure to be nearly $1-$1.5 billion for fiscal 2024. These include expenditures related to capacity expansion, automation, and product and brand innovation.
Guidance
For fiscal 2024, the United States Department of Agriculture (“USDA”) projects domestic protein production for beef to decline 5% versus fiscal 2023. For pork, USDA projects domestic production to jump 2% from fiscal 2023. For chicken, USDA expects projects domestic protein production to rise slightly from fiscal 2023. Management anticipates improved results from the company’s foreign operations during fiscal 2024. Revenues are projected to be relatively flat in fiscal 2024 versus fiscal 2023. It forecasts adjusted operating income to be $1-$1.5 billion for fiscal 2024. Net interest expenses are expected to be $400 million. The adjusted tax rate is likely to be nearly 23% in fiscal 2023.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -48.2% due to these changes.
VGM Scores
At this time, Tyson has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Tyson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.