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Can Tyson Foods' Chicken Segment Drive Consistent Profit Growth?

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Key Takeaways

  • Tyson Foods' chicken segment posted $457M in Q4 adjusted operating income, with margins rising to 10.4%.
  • TSN benefited from higher volumes, better efficiency and lower feed costs, not price increases.
  • Tyson Foods projects chicken operating income of $1.25B-$1.5B in fiscal 2026 amid cost sensitivity.

Tyson Foods, Inc.’s ((TSN - Free Report) ) Chicken segment has emerged as its most reliable profit engine in fiscal 2025, raising the question of whether this momentum can translate into more consistent earnings power over time.

In the fourth quarter of fiscal 2025, chicken delivered adjusted operating income of $457 million, up from $356 million a year ago, with adjusted margins expanding to 10.4% from 8.4%. For the full year, adjusted operating income in chicken rose to $1.48 billion, reflecting margin expansion to 8.8% from 6.2% in fiscal 2024.

This improvement was driven more by better execution than by pricing. Management pointed to higher volumes, stronger operating efficiency and lower feed costs as the main drivers during the quarter. In fact, fiscal 2025 marked the fourth straight quarter of year-over-year volume growth in the chicken business, reflecting steady demand and smoother supply-chain operations. In addition, growth in value-added products supported a more favorable sales mix, helping limit exposure to short-term volatility in commodity chicken pricing. Elevated beef prices, stemming from record-low cattle supplies, have also increased the relative attractiveness of chicken for both consumers and foodservice customers.

Looking ahead to fiscal 2026, Tyson Foods expects the Chicken segment to remain a significant contributor to its profitability, with the segment’s adjusted operating income projected in the range of $1.25 billion to $1.5 billion. Management continues to focus on areas it can directly control to keep performance steady.

However, the chicken business remains sensitive to swings in commodity costs and higher marketing or promotional spending. This means that sustaining recent gains will largely depend on how effectively TSN maintains operational discipline while adapting to changes in the broader protein market.

Tyson Foods’ Zacks Rank & Share Price Performance

Shares of this Zacks Rank #4 (Sell) company have gained 15.1% in the past three months compared with the broader Consumer Staples sector and the industry’s growth of 1.3% and 3.4%, respectively. TSN has also outperformed the S&P 500 index’s growth of 6.4% during the same period.

TSN Stock's Past Month Performance

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Image Source: Zacks Investment Research

Is Tyson Foods a Value Play Stock?

Tyson Foods currently trades at a forward 12-month P/E ratio of 14.56, which is up from the industry average of 12.42. This valuation places the stock at a noticeable premium relative to comparable peers.

TSN P/E Ratio (Forward 12 Months)

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Image Source: Zacks Investment Research

Better-Ranked Stocks

United Natural Foods, Inc. ((UNFI - Free Report) ) distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for United Natural’s current fiscal-year sales and earnings implies growth of 1% and 187.3%, respectively, from the year-ago figures. UNFI delivered a trailing four-quarter earnings surprise of 52.1%, on average.

Mama's Creations, Inc. ((MAMA - Free Report) ) manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA sports a Zacks Rank of 1. Mama's Creations delivered a trailing four-quarter earnings surprise of 133.3%, on average.

The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 39.9% and 44.4%, respectively, from the year-ago figures.

McCormick & Company, Incorporated ((MKC - Free Report) ) manufactures, markets and distributes spices, seasoning mixes, condiments and other flavorful products to the food industry. It holds a Zacks Rank #2 (Buy) at present. McCormick delivered a trailing four-quarter earnings surprise of 2.2%, on average.

The Zacks Consensus Estimate for McCormick’s current fiscal-year sales and earnings implies growth of 1.6% and 2.4%, respectively, from the year-ago figures.

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