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Tyson Foods (TSN) Rallies 15% in 6 Months: Key Growth Drivers

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Tyson Foods, Inc. (TSN - Free Report) appears in a robust position in the meat food space. The company has been showcasing resilience amid industry hurdles with its iconic brand portfolio for sustained market share growth and consumer resonance. Strategic investments in brand building and innovation reinforce the company’s leadership position, driving long-term loyalty.

Shares of this Zacks Rank #2 (Buy) company have rallied 14.7% in the past six months, outperforming the industry’s growth of 5.7%. The Zacks Consensus Estimate for fiscal 2024 earnings per share has gone up from $1.90 to $2.35 over the past 60 days. This suggests substantial growth from the $1.34 reported in fiscal 2023.

Key Drivers

Tyson Foods benefits from a diverse portfolio of core proteins, including chicken, pork and beef. The company's iconic brands, such as Tyson, Jimmy Dean and Hillshire Farm, continue to resonate with consumers, contributing to market share growth. The company prioritizes innovation, marketing and strong customer partnerships to meet consumer preferences and drive long-term brand loyalty.

Tyson Foods’ growth strategy is based 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. The company intends to stay focused on merchandising and advertising to support its brands. While Tyson Foods is pleased with its brand strength, it is constantly building innovations to expand the appeal and market opportunities for its products.

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TSN is benefiting from operational enhancements while making incremental improvements in yield and live operations. Ongoing productivity initiatives based on procurement, logistics and digitalization are likely to solidify the company’s fundamentals. Tyson Foods also focuses on operational excellence across its segments. The company has taken bold actions to enhance operational efficiency, including plant closures, improvements in live operations, yield optimization and labor efficiency.

These upsides aided results in the first quarter of fiscal 2024. During the quarter, strength in the Chicken and Pork segments helped Tyson Foods battle challenges in the Beef unit. Key factors driving the Chicken segment’s performance included operational enhancements, such as proactive measures taken, advancements in live operations, yield optimization, improved labor efficiency and elevated customer service standards, alongside favorable developments in market conditions.

Also, foodservice volumes continued to gain traction in the quarter, driven by the company’s focus on customer diversification and margin-growing channels. Gains from the Williams buyout and continued foodservice business recovery drove volumes in the Prepared Foods segment. Sales in the segment grew to $2,543 million from the $2,538 million reported in the year-ago quarter.  Management expects robust volumes in the rest of the year for the Prepared Foods segment due to continued foodservice momentum and gains from capacity expansion.

These upsides keep Tyson Foods well-positioned amid expected challenges in the Beef segment due to limited cattle supply.

Other Food Picks

The Chef’s Warehouse (CHEF - Free Report) , which engages in the distribution of specialty food products, currently carries a Zacks Rank #2. CHEF has a trailing four-quarter earnings surprise of 3.2%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal-year sales and earnings suggests growth of 8.7% and 4.7%, respectively, from the year-ago reported numbers.

Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2. VITL has a trailing four-quarter average earnings surprise of 155.4%.

The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 20.2% and 28.8%, respectively, from the year-ago reported numbers.

Utz Brands Inc. (UTZ - Free Report) manufactures a diverse portfolio of salty snacks, currently carrying a Zacks Rank #2. UTZ has a trailing four-quarter earnings surprise of 2.6%, on average.

The Zacks Consensus Estimate for Utz Brands’ current financial-year earnings suggests growth of 19.3% from the year-ago reported numbers.

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