Advertisement
UK markets close in 15 minutes
  • FTSE 100

    7,962.07
    +30.09 (+0.38%)
     
  • FTSE 250

    19,889.49
    +78.83 (+0.40%)
     
  • AIM

    743.64
    +1.53 (+0.21%)
     
  • GBP/EUR

    1.1699
    +0.0030 (+0.26%)
     
  • GBP/USD

    1.2633
    -0.0005 (-0.04%)
     
  • Bitcoin GBP

    56,111.75
    +1,673.38 (+3.07%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,252.26
    +3.77 (+0.07%)
     
  • DOW

    39,786.23
    +26.15 (+0.07%)
     
  • CRUDE OIL

    82.55
    +1.20 (+1.48%)
     
  • GOLD FUTURES

    2,236.80
    +24.10 (+1.09%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • HANG SENG

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

    18,497.62
    +20.53 (+0.11%)
     
  • CAC 40

    8,211.51
    +6.70 (+0.08%)
     

Tyson Foods (TSN) Shares Slide on Q2 Loss, Slashed Sales View

Tyson Foods, Inc. TSN has posted soft results for second-quarter fiscal 2023, as the bottom line deteriorated year over year and lagged the Zacks Consensus Estimate. Management has also lowered its revenue guidance for fiscal 2023. This can be accountable to consumers opting for alternatives amid the inflationary landscape, per media sources. Shares of the company tumbled more than 10% in the pre-market trading session on May 8.

Despite a tough protein market, Tyson Foods has been optimistic about its long-term prospects due to its growth strategies and focus on enhancing margins.

Quarter in Detail

The company has posted an adjusted loss of 4 cents per share, lagging the Zacks Consensus Estimate of earnings of 81 cents. The bottom line significantly declined from earnings of $2.29 reported in the year-ago period.

Tyson Foods, Inc. Price, Consensus and EPS Surprise



Tyson Foods, Inc. price-consensus-eps-surprise-chart | Tyson Foods, Inc. Quote

ADVERTISEMENT

Total sales were $13,133 million, nearly flat with the year-ago quarter figure. The top line lagged the Zacks Consensus Estimate of $13,602 million. Average price changes had a 3.2% adverse impact on the top line, while total volumes rose 3.3%.

The gross profit in the quarter came in at $527 million, down from the $1,735 million reported in the prior-year quarter. The gross profit, as a percentage of sales, came in at roughly 4%, down from the 13.2% reported in the year-ago quarter.

Tyson Foods’ adjusted operating income plunged 94% to $65 million. The adjusted operating margin contracted to 0.5% from the 8.9% reported in the year-ago quarter.

Segmental Details

Beef: Sales in the segment declined to $4,617 million from the $5,034 million reported in the year-ago quarter. Volumes dropped 2.9% and the average price fell 5.4% in the segment.

Pork: Sales in the segment declined to $1,421 million from the $1,565 million reported in the year-ago quarter. Volumes climbed 1.1%, while the average price tumbled 10.3%.

Chicken: Sales in the segment increased to $4,430 million from the $4,086 million reported in the year-ago quarter. Sales volumes rose 6.4% and the average price increased 2%.

Prepared Foods: Sales in the segment rose to $2,422 million from the $2,393 million reported in the year-ago quarter. Prepared Foods’ sales volumes dipped 0.4% and the average price increased 1.6%.

International/Other: Sales in the segment were $634 million, up from the $565 million reported in the year-ago quarter. Volumes moved up 8% and the average sales price jumped 4.2%.

Other Financial Updates

The Zacks Rank #3 (Hold) company exited the quarter with cash and cash equivalents of $543 million, long-term debt of $7,865 million and total shareholders’ equity (including non-controlling interests) of $19,558 million. For the six months ended Apr 1, 2023, cash provided by operating activities amounted to $769 million.

Liquidity was $2.2 billion as of Apr 1, 2023. The company entered new term-loan facilities worth $1.75 billion on May 3. Management expects liquidity to exceed the company’s minimum target of $1 billion.

In the first six months of fiscal 2023, the company repurchased 5.1 million shares for $332 million.

Tyson Foods projects a capital expenditure of $2.3 billion for fiscal 2023. These include an expenditure related to capacity expansion and utilization, automation to battle labor-related hurdles, and product and brand innovation.

Guidance

For fiscal 2023, the United States Department of Agriculture (“USDA”) projects domestic protein production (beef, pork, chicken and turkey) to increase slightly from the fiscal 2022 level.

Starting fiscal 2022, management launched a productivity program to drive a better, faster and more agile organization. The company generated productivity savings of more than $700 million in fiscal 2022 and already exceeded its aggregate target of $1 billion by the end of the second quarter of fiscal 2023, which is more than a year ahead of its schedule.

Management anticipates sales of $53-$54 billion for fiscal 2023. Earlier, it expected $55-$57 billion.

Net interest expenses are expected to be $340 million. The adjusted tax rate is likely to be 22% in fiscal 2023.

Segment-Wise Guidance for FY23

For the Beef segment, USDA projects domestic production to fall 4% year over year. For Pork, domestic production is projected to remain nearly flat. Per USDA forecasts, production in the Chicken segment will likely improve by nearly 3% in fiscal 2023. For the fiscal, the company expects better results from its foreign operations in the International/Other segment.

TSN’s shares have lost 5.3% in the past six months compared with the industry’s decline of 8.7%.

Solid Food Picks

Some better-ranked food stocks are Lamb Weston LW, General Mills GIS and Conagra Brands CAG.

Lamb Weston, which operates as a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year EPS suggests an increase of 116.8% from the year-ago reported number.

General Mills, a food and beverage product company, currently has a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.

The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the year-ago reported figures.

Conagra Brands, which operates as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average.

The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests increases of 7.1% and 16.5%, respectively, from the year-ago reported numbers.

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

General Mills, Inc. (GIS) : Free Stock Analysis Report

Conagra Brands (CAG) : Free Stock Analysis Report

Tyson Foods, Inc. (TSN) : Free Stock Analysis Report

Lamb Weston (LW) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research