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Tyson Foods Inc. (TSN - Free Report) is committed to executing core strategies and maximizing its diverse portfolio of proteins. The renowned meat products company’s commitment to accelerating its three strategic growth pillars bodes well. Management has undertaken bold actions to enhance operational efficiency.
Let’s delve deeper.
Growth Pillars on Track
Tyson Foods’ growth strategy is based on three main pillars, which include driving growth across the core protein platform. The company maintains a leadership position in the protein industry, boasting some of the most renowned brands in food and a wide range of offerings. While Tyson Foods is pleased with its brand strength, it is constantly building innovations to expand the appeal and market opportunities for its products. Management expects global demand for protein to continue rising and is well-placed to cater to it.
The company is 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 solidify the company’s fundamentals. Tyson Foods is refining its digital capabilities, leveraging data, automation and AI technology to enhance decision-making and drive better outcomes.
Image Source: Zacks Investment Research
Measures to Boost Efficiency
Tyson Foods has taken bold actions to enhance operational efficiency, including plant closures, improvements in live operations, yield optimization and labor efficiency. This effort involved the closure of the last of six chicken facilities and two case-ready beef facilities. One of its pork plants is slated for closure as part of this ongoing optimization process. These actions are likely to fuel efficiencies across segments.
The company is investing in capacity expansion and automation technology investments. Management continues to accelerate digitalization via supply chain planning and execution processes to enhance customer service. Management is optimizing its plant network by adding fully-cooked capacity, converting plants for value-added production, executing plant flexibility and strengthening the portfolio mix.
TSN is focused on efforts to expand into the international markets as part of its strategic growth plan. 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.
Macro-Economic Hurdles
Despite Tyson Foods' efforts to navigate the challenges of a tight cattle supply environment, the beef segment continues to face significant setbacks. Limited cattle supplies have led to considerable spread compression, resulting in a decrease in adjusted operating income (AOI). In second-quarter fiscal 2024, segmental adjusted operating loss came in at $34 million against earnings of $8 million reported in the year-ago quarter. Revenue growth in the beef segment is marred by the substantial decline in AOI, indicating a concerning trend for the company's profitability.
The uncertainty related to consumer behavior, coupled with the unpredictable progression of the cattle cycle and fluctuating commodity costs, cast shadows of doubt on the company's performance. Adding to the complexity are the seasonal trends in pork and prepared foods, further complicating matters.
With that being said, Tyson Foods’ attention to the advantages mentioned above is expected to support growth despite these challenges. The Zacks Rank #3 (Hold) company’s shares have increased 6.7% in the past six months compared with the industry’s 5.6% growth.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings indicates growth of 22.5% and 59.3%, respectively, from year-ago reported numbers.
Freshpet, Inc. (FRPT - Free Report) , a pet food company, has a trailing four-quarter earnings surprise of 118.2%, on average. FRPT currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported level.
Utz Brands Inc. (UTZ - Free Report) , which manufactures a diverse range of salty snacks, currently carries a Zacks Rank #2 (Buy). UTZ has a trailing four-quarter earnings surprise of 2%, on average.
The consensus estimate for Utz Brands’ current financial-year earnings indicates growth of 26.3% from year-ago reported numbers.
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Tyson Foods (TSN) Advances Growth Pillars & Boosts Efficiency
Tyson Foods Inc. (TSN - Free Report) is committed to executing core strategies and maximizing its diverse portfolio of proteins. The renowned meat products company’s commitment to accelerating its three strategic growth pillars bodes well. Management has undertaken bold actions to enhance operational efficiency.
Let’s delve deeper.
Growth Pillars on Track
Tyson Foods’ growth strategy is based on three main pillars, which include driving growth across the core protein platform. The company maintains a leadership position in the protein industry, boasting some of the most renowned brands in food and a wide range of offerings. While Tyson Foods is pleased with its brand strength, it is constantly building innovations to expand the appeal and market opportunities for its products. Management expects global demand for protein to continue rising and is well-placed to cater to it.
The company is 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 solidify the company’s fundamentals. Tyson Foods is refining its digital capabilities, leveraging data, automation and AI technology to enhance decision-making and drive better outcomes.
Image Source: Zacks Investment Research
Measures to Boost Efficiency
Tyson Foods has taken bold actions to enhance operational efficiency, including plant closures, improvements in live operations, yield optimization and labor efficiency. This effort involved the closure of the last of six chicken facilities and two case-ready beef facilities. One of its pork plants is slated for closure as part of this ongoing optimization process. These actions are likely to fuel efficiencies across segments.
The company is investing in capacity expansion and automation technology investments. Management continues to accelerate digitalization via supply chain planning and execution processes to enhance customer service. Management is optimizing its plant network by adding fully-cooked capacity, converting plants for value-added production, executing plant flexibility and strengthening the portfolio mix.
TSN is focused on efforts to expand into the international markets as part of its strategic growth plan. 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.
Macro-Economic Hurdles
Despite Tyson Foods' efforts to navigate the challenges of a tight cattle supply environment, the beef segment continues to face significant setbacks. Limited cattle supplies have led to considerable spread compression, resulting in a decrease in adjusted operating income (AOI). In second-quarter fiscal 2024, segmental adjusted operating loss came in at $34 million against earnings of $8 million reported in the year-ago quarter. Revenue growth in the beef segment is marred by the substantial decline in AOI, indicating a concerning trend for the company's profitability.
The uncertainty related to consumer behavior, coupled with the unpredictable progression of the cattle cycle and fluctuating commodity costs, cast shadows of doubt on the company's performance. Adding to the complexity are the seasonal trends in pork and prepared foods, further complicating matters.
With that being said, Tyson Foods’ attention to the advantages mentioned above is expected to support growth despite these challenges. The Zacks Rank #3 (Hold) company’s shares have increased 6.7% in the past six months compared with the industry’s 5.6% growth.
Top-Rated Staple Picks
Vital Farms Inc. (VITL - Free Report) offers a range of produced pasture-raised foods. It currently sports a Zacks Rank #1 (Strong Buy). VITL has a trailing four-quarter average earnings surprise of 102.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings indicates growth of 22.5% and 59.3%, respectively, from year-ago reported numbers.
Freshpet, Inc. (FRPT - Free Report) , a pet food company, has a trailing four-quarter earnings surprise of 118.2%, on average. FRPT currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 24.8% and 177.1%, respectively, from the prior-year reported level.
Utz Brands Inc. (UTZ - Free Report) , which manufactures a diverse range of salty snacks, currently carries a Zacks Rank #2 (Buy). UTZ has a trailing four-quarter earnings surprise of 2%, on average.
The consensus estimate for Utz Brands’ current financial-year earnings indicates growth of 26.3% from year-ago reported numbers.