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Tyson Foods (TSN) Q1 Earnings Surpass Estimates, Sales Miss

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Tyson Foods, Inc. (TSN - Free Report) posted first-quarter fiscal 2024 results, wherein the bottom line declined year over year while beating the Zacks Consensus Estimate. The company benefited from its diverse protein portfolio and operational efficacies stemming from its strategic plans laid out last year.

Management remains committed to prioritizing its liquidity and financial condition, alongside staying focused on driving operational excellence and strengthening its consumer and customer base.

Quarter in Detail

Tyson Foods posted adjusted earnings of 69 cents per share, which comfortably beat the Zacks Consensus Estimate of 42 cents per share. However, the bottom line declined 19% year over year.

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

Total sales were $13,319 million, up 0.4% from the year-ago quarter figure. However, the top line lagged the Zacks Consensus Estimate of $13,457 million. Average price changes had a 0.4% positive impact on the top line, while total volumes remained flat year over year.

The gross profit in the quarter was $823 million, down almost 15% from the $968 million reported in the year-ago period. As a percentage of sales, the gross profit was 6.2%, down from the 7.3% reported in the year-ago quarter.

Tyson Foods’ adjusted operating income tumbled 9% to $411 million. The adjusted operating margin contracted to 3.1% from the 3.4% reported in the year-ago quarter.

Segmental Details

Beef: Sales in the segment increased to $5,023 million from the $4,723 million reported in the year-ago quarter. Volumes dropped 4.1%, but the average price increased 10.5% in the segment.

Pork: Sales in the segment fell to $1,517 million from the $1,529 million reported in the year-ago quarter. Volumes grew 7.7%, while the average price tumbled 8.5%.

Chicken: Sales in the segment decreased to $4,033 million from the $4,263 million reported in the year-ago quarter. Sales volumes fell 1.5%, and the average price decreased 3.9%.

Prepared Foods: Sales in the segment grew to $2,543 million from the $2,538 million reported in the year-ago quarter. Prepared Foods’ sales volumes inched up 2.5%, and the average price decreased 2.3%.

International/Other: Sales in the segment were $582 million, down from the $612 million reported in the year-ago quarter. Volumes jumped 2.2%, and the average sales price fell 7.1%.

Other Financial Updates

The company exited the quarter with cash and cash equivalents of $1,484 million, long-term debt of $8,370 million and total shareholders’ equity (including non-controlling interests) of $18,288 million. For the first quarter, cash provided by operating activities amounted to $1,300 million.

Liquidity was about $3.7 billion as of Dec 30, 2023. Management expects liquidity to stay above the company’s minimum target of $1 billion in fiscal 2024. 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”) expects domestic protein production (beef, pork, chicken and turkey) to increase slightly from the fiscal 2023 levels.

For the Beef segment, the USDA projects domestic protein production for beef to decline 2% year over year in fiscal 2024. For Pork, the USDA projects domestic production to jump 2% from fiscal 2023. For Chicken, USDA expects projects domestic protein production to remain flat year over year. Management anticipates improved adjusted results from the company’s foreign operations during fiscal 2024.

Total company sales are projected to be relatively flat in fiscal 2024 versus fiscal 2023. Adjusted operating income is envisioned in the $1-$1.5 billion band in fiscal 2024.

This Zacks Rank #1 (Strong Buy) stock has rallied 21% in the past three months compared with the industry’s 6.2% growth.

3 Solid Consumer Staple Picks

Pilgrim’s Pride (PPC - Free Report) , engaged in the production, processing, marketing and distribution of fresh, frozen and value-added chicken and pork products, currently sports a Zacks Rank #1. PPC’s bottom line has outperformed the Zacks Consensus Estimate by a wide margin in the trailing four quarters, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Pilgrim’s Pride’s 2024 earnings per share (EPS) suggests growth of 62.4% from the year-ago reported number.

Flowers Foods (FLO - Free Report) , a packaged bakery food products company, currently carries a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 6.8%, on average.

The Zacks Consensus Estimate for Flowers Foods’ 2024 sales and EPS suggests growth of 1.9% and 6.8%, respectively, from the corresponding year-ago reported figures.

TreeHouse Foods (THS - Free Report) , a private-label food and beverage company, currently carries a Zacks Rank #2. THS has a trailing four-quarter earnings surprise of 26.5%, on average.

The Zacks Consensus Estimate for TreeHouse Foods’ current fiscal-year EPS suggests growth of around 106% from the corresponding year-ago reported figure.

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