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Why Is Tyson (TSN) Down 3.7% Since Last Earnings Report?
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A month has gone by since the last earnings report for Tyson Foods (TSN - Free Report) . Shares have lost about 3.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Tyson due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Tyson Foods Q2 Earnings Top Estimates Despite Lower Sales
Tyson Foods posted second-quarter fiscal 2024 results, wherein the top line declined year over year and fell short of the Zacks Consensus Estimate. However, the bottom line reverted to growth and easily surpassed the consensus mark. Management raised its adjusted operating income guidance range for fiscal 2024.
Tyson Foods sustained its positive momentum in the quarter while advancing its key initiatives. The strategies in place are yielding tangible results, as reflected in year-over-year bottom-line growth. Moving forward, into the back half of the year, the company remains focused on executing fundamental strategies and maximizing the multi-protein portfolio.
Quarter in Detail
Tyson Foods posted adjusted earnings of 62 cents per share, which comfortably beat the Zacks Consensus Estimate of 35 cents per share. The bottom line increased considerably from the year-ago period’s loss of 4 cents per share.
Total sales were $13,072 million, down 0.5% from the year-ago quarter figure. The top line lagged the Zacks Consensus Estimate of $13,133 million. Average price changes had a 1% positive impact on the top line, while total volumes dipped 1.5% year over year.
The gross profit in the quarter was $866 million, up from the $527 million reported in the year-ago period. Tyson Foods’ adjusted operating income soared considerably to $406 million from the $65 million reported in the year-ago period. The adjusted operating margin expanded to 3.1% from the 0.5% reported in the year-ago quarter.
Segmental Details
Beef: Sales in the segment increased to $4,954 million from the $4,617 million reported in the year-ago quarter. Volumes rose 2.8%, and the average price increased 4.5% in the segment.
Pork: Sales in the segment advanced to $1,486 million from the $1,421 million reported in the year-ago quarter. Volumes grew 2.9%, and the average price rose 1.7%.
Chicken: Sales in the segment decreased to $4,065 million from the $4,430 million reported in the year-ago quarter. Sales volumes fell 6.1%, and the average price decreased 2.1%.
Prepared Foods: Sales in the segment dropped to $2,404 million from the $2,422 million reported in the year-ago quarter. Prepared Foods’ sales volumes inched up 0.7%, and the average price decreased 1.4%.
International/Other: Sales in the segment were $580 million, down from the $634 million reported in the year-ago quarter. Volumes jumped 3%, and the average sales price fell 11.5%.
Other Financial Updates
The company exited the quarter with cash and cash equivalents of $2,182 million, long-term debt of $9,645 million and total shareholders’ equity (including non-controlling interests) of $18,223 million. For the six months ended Mar 30, 2024, cash provided by operating activities amounted to $1,177 million. Liquidity was about $4.4 billion as of Mar 30, 2024. Management expects liquidity to stay above the company’s minimum target of $1 billion in fiscal 2024. Tyson Foods projects capital expenditure to be nearly $1.2-$1.4 billion for fiscal 2024. These include expenditures related to capacity expansion, automation, and product and brand innovation.
Guidance
For fiscal 2024, the USDA suggests domestic protein production (beef, pork, chicken and turkey) to increase slightly from the fiscal 2023 levels.
For the Beef segment, the USDA projects domestic protein production for beef to decline 2% year over year in fiscal 2024. For Pork, the USDA projects domestic production to jump nearly 3% from fiscal 2023. For Chicken, USDA expects projects domestic protein production to rise about 1% year over year. Management anticipates improved adjusted results from the company’s foreign operations during fiscal 2024.
Total company sales are projected to be relatively flat in fiscal 2024 versus fiscal 2023. Adjusted operating income is envisioned in the $1.4-$1.8 billion band in fiscal 2024, up from the $1-$1.5 billion band projected earlier. Segment-wise, management expects a fiscal 2024 adjusted operating loss of $400-$100 million for the Beef segment. For the Pork, Chicken and Prepared Foods segments, Tyson Foods envisions fiscal 2024 adjusted operating income of $50-$150 million, $700-$900 million and $850-$950 million, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -15.62% due to these changes.
VGM Scores
Currently, Tyson has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Tyson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Tyson (TSN) Down 3.7% Since Last Earnings Report?
A month has gone by since the last earnings report for Tyson Foods (TSN - Free Report) . Shares have lost about 3.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Tyson due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Tyson Foods Q2 Earnings Top Estimates Despite Lower Sales
Tyson Foods posted second-quarter fiscal 2024 results, wherein the top line declined year over year and fell short of the Zacks Consensus Estimate. However, the bottom line reverted to growth and easily surpassed the consensus mark. Management raised its adjusted operating income guidance range for fiscal 2024.
Tyson Foods sustained its positive momentum in the quarter while advancing its key initiatives. The strategies in place are yielding tangible results, as reflected in year-over-year bottom-line growth. Moving forward, into the back half of the year, the company remains focused on executing fundamental strategies and maximizing the multi-protein portfolio.
Quarter in Detail
Tyson Foods posted adjusted earnings of 62 cents per share, which comfortably beat the Zacks Consensus Estimate of 35 cents per share. The bottom line increased considerably from the year-ago period’s loss of 4 cents per share.
Total sales were $13,072 million, down 0.5% from the year-ago quarter figure. The top line lagged the Zacks Consensus Estimate of $13,133 million. Average price changes had a 1% positive impact on the top line, while total volumes dipped 1.5% year over year.
The gross profit in the quarter was $866 million, up from the $527 million reported in the year-ago period. Tyson Foods’ adjusted operating income soared considerably to $406 million from the $65 million reported in the year-ago period. The adjusted operating margin expanded to 3.1% from the 0.5% reported in the year-ago quarter.
Segmental Details
Beef: Sales in the segment increased to $4,954 million from the $4,617 million reported in the year-ago quarter. Volumes rose 2.8%, and the average price increased 4.5% in the segment.
Pork: Sales in the segment advanced to $1,486 million from the $1,421 million reported in the year-ago quarter. Volumes grew 2.9%, and the average price rose 1.7%.
Chicken: Sales in the segment decreased to $4,065 million from the $4,430 million reported in the year-ago quarter. Sales volumes fell 6.1%, and the average price decreased 2.1%.
Prepared Foods: Sales in the segment dropped to $2,404 million from the $2,422 million reported in the year-ago quarter. Prepared Foods’ sales volumes inched up 0.7%, and the average price decreased 1.4%.
International/Other: Sales in the segment were $580 million, down from the $634 million reported in the year-ago quarter. Volumes jumped 3%, and the average sales price fell 11.5%.
Other Financial Updates
The company exited the quarter with cash and cash equivalents of $2,182 million, long-term debt of $9,645 million and total shareholders’ equity (including non-controlling interests) of $18,223 million. For the six months ended Mar 30, 2024, cash provided by operating activities amounted to $1,177 million. Liquidity was about $4.4 billion as of Mar 30, 2024. Management expects liquidity to stay above the company’s minimum target of $1 billion in fiscal 2024. Tyson Foods projects capital expenditure to be nearly $1.2-$1.4 billion for fiscal 2024. These include expenditures related to capacity expansion, automation, and product and brand innovation.
Guidance
For fiscal 2024, the USDA suggests domestic protein production (beef, pork, chicken and turkey) to increase slightly from the fiscal 2023 levels.
For the Beef segment, the USDA projects domestic protein production for beef to decline 2% year over year in fiscal 2024. For Pork, the USDA projects domestic production to jump nearly 3% from fiscal 2023. For Chicken, USDA expects projects domestic protein production to rise about 1% year over year. Management anticipates improved adjusted results from the company’s foreign operations during fiscal 2024.
Total company sales are projected to be relatively flat in fiscal 2024 versus fiscal 2023. Adjusted operating income is envisioned in the $1.4-$1.8 billion band in fiscal 2024, up from the $1-$1.5 billion band projected earlier. Segment-wise, management expects a fiscal 2024 adjusted operating loss of $400-$100 million for the Beef segment. For the Pork, Chicken and Prepared Foods segments, Tyson Foods envisions fiscal 2024 adjusted operating income of $50-$150 million, $700-$900 million and $850-$950 million, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -15.62% due to these changes.
VGM Scores
Currently, Tyson has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Tyson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.