How Analysts View Tyson Foods Stock after Its Fiscal 2Q17 Results
Ratings summary and target price
The majority of analysts covering Tyson Foods (TSN) remain positive on the stock. However, this could change following the company’s weak fiscal 2Q17 results. The analysts’ consensus rating on the stock was 2.3 on a scale of 1.0 for “strong buy” to 5.0 for “strong sell.”
As the graph below shows, 59.0% of the analysts recommended a “buy” for Tyson Foods stock, 33.0% recommended a “hold,” and 8.0% rated it a “sell.” On May 9, 2017, Tyson Foods was trading at $57.88 per share, which is about 18.7% below analysts’ 12-month price target of $68.73.
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Tyson Foods (TSN) continues to witness strong demand for its Beef, Pork, and Chicken segments, which are expected to drive volumes in the coming quarters. Meanwhile, the company is restructuring its portfolio by divesting its non-protein business to focus on its core product portfolio.
The company’s strategic acquisition of AdvancePierre Foods Holdings could fortify the company’s Prepared Foods segment through expanding its product offerings. Other products such as Jimmy Dean Delights Frittatas, Jimmy Dean Stuffed Hash Browns, Hillshire Snacking, and Tyson Premium Selects Nuggets are generating strong demand and are expected to drive volume growth in coming quarters.
However, low average selling prices, increased operational costs, and the company’s increased investment in marketing, advertising, and promotion to support innovation and new product launches could pressure margins.
Of the nine analysts covering Hormel Foods (HRL) stock, 33.0% rated it a “buy,” and 67.0% rated it a “hold.” As for Campbell Soup (CPB) stock, 13.0% rated the stock a “buy,” 56.0% recommended a “hold,” and 31.0% rated it a “sell.”
For Sanderson Farms (SAFM), 22.0% recommended a “buy,” 56.0% recommended a “hold,” and 22.0% rated it a “sell.” Of the eight analysts covering Pilgrim’s Pride (PPC) stock, 25.0% of the analysts rated the stock a “buy,” and 75.0% rated it a “hold.”
On May 9, 2017, Tyson Foods was trading at a 12-month forward PE (price-to-earnings) ratio of 12.1x, which is significantly below the S&P 500 (SPX) Index’s current forward PE ratio of 18.7x and the Consumer Staples Select Sector SPDR ETF’s (XLP) forward PE ratio of 21.1x.
Tyson Foods’ current forward PE multiple is also lower than the multiples for Sanderson Farms (SAFM), Campbell Soup (CPB), and Hormel Foods (HRL), which were trading at forward PE multiples of 12.3x, 18.4x, and 20.6x, respectively.
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