Advertisement
UK markets closed
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • FTSE 250

    19,884.73
    +74.07 (+0.37%)
     
  • AIM

    743.26
    +1.15 (+0.15%)
     
  • GBP/EUR

    1.1689
    -0.0004 (-0.04%)
     
  • GBP/USD

    1.2614
    -0.0008 (-0.06%)
     
  • Bitcoin GBP

    55,675.48
    -401.47 (-0.72%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CRUDE OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD FUTURES

    2,254.80
    +16.40 (+0.73%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • CAC 40

    8,205.81
    +1.00 (+0.01%)
     

Tyson Foods (TSN) Down 8% in 3 Months: Rising Costs a Woe

Tyson Foods, Inc. TSN continues to grapple with rising labor and freight expenses. These factors dragged the company’s operating profits in most segments in second-quarter fiscal 2018. Further, the company’s Pork sales volumes have been sluggish lately. Owing to such deterrents, shares of the company have declined 8.6% in the past three months compared with the industry’s 3.7% slip.

Fretting Over Rising Costs

Tyson Foods has been increasing employee investments to improve productivity, which has been raising cost burden. Such factors were a headwind in the company’s Chicken, Beef and Pork segments during the second quarter of fiscal 2018. Also, the company has been witnessing higher freight expenses. Evidently, higher freight expenses affected operating income in most of the company’s segments during the second quarter. Going ahead, this Zacks Rank #4 (Sell) company expects these hurdles to linger, which is likely to increase overall expenses in fiscal 2018.



 

 

ADVERTISEMENT

Pork Volumes Look Dismal

Although Tyson Foods’ has been witnessing growth in the Chicken, Beef and Prepared Foods segments, sales volumes in the Pork category has been slipping lately. In fact, during the fourth quarter, the segment’s sales volume declined 1.1% year over year. This was largely due to the company’s efforts to reduce volumes to match production with consumer demand. Additionally, adverse weather conditions and staffing issues were a headwind in this category during the quarter.

Further, China’s recent tariff hikes on pork have caused dark clouds to hover on the meat industry. The raised tariff rate is likely to cause significant loss of market in China for several meat exporters, including Tyson Foods. This might dampen the company’s revenues in the Pork segment during the forthcoming periods.

Final Thoughts

While the aforementioned factors have made investors apprehensive, there are several bright spots that are encouraging. Notably, booming sales in the company’s Chicken, Beef and Prepared Foods categories has been aiding performance for a while. In fact, this, combined with cost savings from the Financial Fitness program and positive synergies from the AdvancePierre’ buyout, bolstered the company’s second-quarter fiscal 2018 performance. Encouragingly, management expects such upsides to sustain in the forthcoming periods. We hope that these factors will aid the company to achieve a turnaround in its price performance and raise investors’ optimism in the stock.

Greedy for Consumer Staples Stocks? Check These

United Natural Foods UNFI, with a solid earnings surprise history and long-term earnings growth rate of 8.2%, carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Conagra Brands Inc, CAG, with a Zacks Rank #2, has an impressive earnings surprise history.

Inter Parfums, Inc. IPAR, with long-term earnings growth rate of 12.3%, carries a Zacks Rank #2.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>


 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Inter Parfums, Inc. (IPAR) : Free Stock Analysis Report
 
United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
 
Tyson Foods, Inc. (TSN) : Free Stock Analysis Report
 
Conagra Brands Inc. (CAG) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research