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Evaluating Tyson Foods (TSN) Before Q2 Earnings: Risks & Rewards
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Tyson Foods, Inc. (TSN - Free Report) is all set to release second-quarter fiscal 2024 earnings results on May 6 before the opening bell, prompting investors to evaluate the opportunities and risks associated with investing in this meat products giant. While brand strength, product diversification and operational excellence present solid opportunities, investing in Tyson Foods does come with its set of uncertainties.
The Zacks Consensus Estimate for second-quarter revenues stands at $13.1 billion, almost in line with the figure reported in the year-ago period. Nonetheless, analysts' expectations for TSN’s upcoming earnings paint a bright picture. The consensus estimate for earnings per share has remained unchanged at 35 cents over the past 30 days, marking a significant jump from the year-ago period’s loss of 4 cents per share.
All said, the decision to invest in Tyson Foods ahead of its quarterly earnings release demands a thoughtful evaluation of both potential rewards and inherent risks.
Tyson Foods, Inc. Price, Consensus and EPS Surprise
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. Tyson Foods’ focus on brand building and innovation has been helping it grow its market share. The company prioritizes innovation, marketing and strong customer partnerships to meet consumer preferences and drive long-term brand loyalty.
Tyson Foods’ growth strategy includes bolstering the core protein platform to make the most of the rising protein demand. The company is also 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 continue solidifying the company’s fundamentals.
Meanwhile, Tyson Foods’ efforts to expand into the international markets also form part of its strategic growth plan. Recently, the company inaugurated a new fully cooked food production facility in Danville, VA, worth $300 million. This action goes in tandem with Tyson Foods’ strategy to fuel sustained growth, enhance operational efficiency and invest in its poultry space.
A closer look reveals that strength in the Chicken and Pork segments helped Tyson Foods battle challenges in the Beef unit in the first quarter of fiscal 2024. Tyson Foods faced challenges in the Beef segment due to limited cattle supply, leading to spread compression and lower profitability. On its last earnings call, management stated that it expects the uncertainty around the cattle cycle to persist.
Apart from this, TSN highlighted that the second quarter is seasonally the company’s weakest in terms of adjusted operating income and cash flows. Additionally, the severe winter in January 2024 disrupted the company’s operations, which is likely to be reflected in second-quarter results. Apart from this, the company expects higher start-up costs in the Prepared Foods segment to affect second-quarter profits. While these factors might pose hurdles in the near term, Tyson Foods’ overall prospects look bright in the long run.
Valuation Picture & Zacks Model
Tyson Foods exhibits a forward 12-month price-to-earnings ratio of 19.51, slightly above the Food – Meat Products industry's average of 19.04 but significantly below its five-year high of 38.54. This suggests that while the current valuation is above the industry average, there's a significant gap from its historical high, indicating potential room for growth. Investors may view this as an opportunity, considering Tyson Foods' strong market position and potential for future performance improvements. The current Value Score of A adds weight to this optimistic view.
Recent market movements show Tyson Foods' shares rising by 6% in the last three months compared with the industry's growth of 13.8%. Trading at $60.95, Tyson Foods is poised to potentially surpass its 52-week high of $61.71, as our proven model predicts that the company is likely to beat earnings estimates in the impending release.
The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. Tyson Foods has an Earnings ESP of +12.86% and carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
What’s More?
A look at the road ahead for Tyson Foods reveals a fairly decent picture. Though the Zacks Consensus Estimate for sales for the current fiscal year stands at $52.8 billion, suggesting a 0.2% dip from the year-ago period, the consensus mark for the next fiscal year is pegged at roughly $54 billion, which calls for 2.4% year-over-year growth. The consensus estimate for earnings per share is pegged at $2.33 and $3.81 for current and next fiscal years, which suggests an increase of 73.4% and 63.3%, respectively.
Other Stocks With the Favorable Combination
Here are three other companies worth considering, as our model shows that these also have the correct combination to beat on earnings this time:
Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) currently has an Earnings ESP of +0.77% and a Zacks Rank of 3. The company is likely to register top and bottom-line increases when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for Ollie's Bargain’s quarterly revenues is pegged at $503.8 million, which indicates growth of 9.7% 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 Ollie's Bargain’s quarterly earnings of 65 cents suggests a rise of 32.7% from the year-ago quarter’s levels. OLLI has a trailing four-quarter earnings surprise of 7.3%, on average.
International Flavors & Fragrances Inc. (IFF - Free Report) currently has an Earnings ESP of +15.59% and a Zacks Rank of 3. The company is likely to register a top and bottom-line decline when it reports first-quarter 2024 numbers. The Zacks Consensus Estimate for International Flavors’ quarterly revenues is pegged at $2.8 billion, which indicates a decrease of 7.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for International Flavors’ quarterly earnings of 84 cents suggests a drop of 3.5% from the year-ago quarter’s levels. OLLI has a trailing four-quarter negative earnings surprise of 2.7%, on average.
Coty (COTY - Free Report) currently has an Earnings ESP of +4.23% and a Zacks Rank #3. The company is expected to register top-line growth when it reports third-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for COTY’s quarterly revenues is pegged at $1.37 billion, which suggests an increase of 6.6% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for COTY’s quarterly earnings has been unchanged at 6 cents in the past 30 days, which calls for a 68.4% decline from the year-ago quarter’s reported number. COTY delivered an earnings beat of 115.3%, on average, in the trailing four quarters.
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Evaluating Tyson Foods (TSN) Before Q2 Earnings: Risks & Rewards
Tyson Foods, Inc. (TSN - Free Report) is all set to release second-quarter fiscal 2024 earnings results on May 6 before the opening bell, prompting investors to evaluate the opportunities and risks associated with investing in this meat products giant. While brand strength, product diversification and operational excellence present solid opportunities, investing in Tyson Foods does come with its set of uncertainties.
The Zacks Consensus Estimate for second-quarter revenues stands at $13.1 billion, almost in line with the figure reported in the year-ago period. Nonetheless, analysts' expectations for TSN’s upcoming earnings paint a bright picture. The consensus estimate for earnings per share has remained unchanged at 35 cents over the past 30 days, marking a significant jump from the year-ago period’s loss of 4 cents per share.
All said, the decision to invest in Tyson Foods ahead of its quarterly earnings release demands a thoughtful evaluation of both potential rewards and inherent risks.
Tyson Foods, Inc. Price, Consensus and EPS Surprise
Tyson Foods, Inc. price-consensus-eps-surprise-chart | Tyson Foods, Inc. Quote
Measuring the Pros & Cons
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. Tyson Foods’ focus on brand building and innovation has been helping it grow its market share. The company prioritizes innovation, marketing and strong customer partnerships to meet consumer preferences and drive long-term brand loyalty.
Tyson Foods’ growth strategy includes bolstering the core protein platform to make the most of the rising protein demand. The company is also 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 continue solidifying the company’s fundamentals.
Meanwhile, Tyson Foods’ efforts to expand into the international markets also form part of its strategic growth plan. Recently, the company inaugurated a new fully cooked food production facility in Danville, VA, worth $300 million. This action goes in tandem with Tyson Foods’ strategy to fuel sustained growth, enhance operational efficiency and invest in its poultry space.
A closer look reveals that strength in the Chicken and Pork segments helped Tyson Foods battle challenges in the Beef unit in the first quarter of fiscal 2024. Tyson Foods faced challenges in the Beef segment due to limited cattle supply, leading to spread compression and lower profitability. On its last earnings call, management stated that it expects the uncertainty around the cattle cycle to persist.
Apart from this, TSN highlighted that the second quarter is seasonally the company’s weakest in terms of adjusted operating income and cash flows. Additionally, the severe winter in January 2024 disrupted the company’s operations, which is likely to be reflected in second-quarter results. Apart from this, the company expects higher start-up costs in the Prepared Foods segment to affect second-quarter profits. While these factors might pose hurdles in the near term, Tyson Foods’ overall prospects look bright in the long run.
Valuation Picture & Zacks Model
Tyson Foods exhibits a forward 12-month price-to-earnings ratio of 19.51, slightly above the Food – Meat Products industry's average of 19.04 but significantly below its five-year high of 38.54. This suggests that while the current valuation is above the industry average, there's a significant gap from its historical high, indicating potential room for growth. Investors may view this as an opportunity, considering Tyson Foods' strong market position and potential for future performance improvements. The current Value Score of A adds weight to this optimistic view.
Recent market movements show Tyson Foods' shares rising by 6% in the last three months compared with the industry's growth of 13.8%. Trading at $60.95, Tyson Foods is poised to potentially surpass its 52-week high of $61.71, as our proven model predicts that the company is likely to beat earnings estimates in the impending release.
The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. Tyson Foods has an Earnings ESP of +12.86% and carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
What’s More?
A look at the road ahead for Tyson Foods reveals a fairly decent picture. Though the Zacks Consensus Estimate for sales for the current fiscal year stands at $52.8 billion, suggesting a 0.2% dip from the year-ago period, the consensus mark for the next fiscal year is pegged at roughly $54 billion, which calls for 2.4% year-over-year growth. The consensus estimate for earnings per share is pegged at $2.33 and $3.81 for current and next fiscal years, which suggests an increase of 73.4% and 63.3%, respectively.
Other Stocks With the Favorable Combination
Here are three other companies worth considering, as our model shows that these also have the correct combination to beat on earnings this time:
Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) currently has an Earnings ESP of +0.77% and a Zacks Rank of 3. The company is likely to register top and bottom-line increases when it reports first-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for Ollie's Bargain’s quarterly revenues is pegged at $503.8 million, which indicates growth of 9.7% 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 Ollie's Bargain’s quarterly earnings of 65 cents suggests a rise of 32.7% from the year-ago quarter’s levels. OLLI has a trailing four-quarter earnings surprise of 7.3%, on average.
International Flavors & Fragrances Inc. (IFF - Free Report) currently has an Earnings ESP of +15.59% and a Zacks Rank of 3. The company is likely to register a top and bottom-line decline when it reports first-quarter 2024 numbers. The Zacks Consensus Estimate for International Flavors’ quarterly revenues is pegged at $2.8 billion, which indicates a decrease of 7.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for International Flavors’ quarterly earnings of 84 cents suggests a drop of 3.5% from the year-ago quarter’s levels. OLLI has a trailing four-quarter negative earnings surprise of 2.7%, on average.
Coty (COTY - Free Report) currently has an Earnings ESP of +4.23% and a Zacks Rank #3. The company is expected to register top-line growth when it reports third-quarter fiscal 2024 numbers. The Zacks Consensus Estimate for COTY’s quarterly revenues is pegged at $1.37 billion, which suggests an increase of 6.6% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for COTY’s quarterly earnings has been unchanged at 6 cents in the past 30 days, which calls for a 68.4% decline from the year-ago quarter’s reported number. COTY delivered an earnings beat of 115.3%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.