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Tyson Foods Disappoints in Fiscal 2Q17, Stock Falls 6.1%

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Tyson Foods Disappoints in Fiscal 2Q17, Stock Falls 6.1% PART 1 OF 5

Tyson Foods Disappoints in Fiscal 2Q17, Stock Falls 6.1%

TSN stock dipped after earnings release

Tyson Foods (TSN) reported its fiscal 2Q17 results on May 8, 2017, before the markets opened. The company’s fiscal 2Q17 EPS (earnings per share) missed analysts’ estimates and decreased YoY (year-over-year), reflecting sluggish volume. The company’s fiscal 2Q17 ended April 1, 2017.

TSN’s expected sales remained tepid owing to seasonality, a fire at two chicken plants, and a late Easter. The company’s stock fell 6.1% following weak results.

Tyson Foods Disappoints in Fiscal 2Q17, Stock Falls 6.1%

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Tyson Foods lags peers

Year-to-date, Tyson Foods (TSN) stock has decreased 6.2% through May 9, 2017. TSN stock also underperformed the S&P 500 Index (SPX) and the Consumer Staples Select Sector SPDR ETF (XLP) in terms of price gains.

TSN underperformed rivals Sanderson Farms (SAFM), Pilgrim’s Pride (PPC), and Hormel Foods (HRL), which generated returns of 21.1%, 30.1%, and -0.7%, respectively.

Tyson Foods witnessed a volume decline in all segments despite a strong demand for beef and pork. Meanwhile, pricing remained low due to livestock availability. The company had expected the second quarter to remain challenged owing to the seasonality of its business. Plus, the deflationary pricing environment pressured its margins.

Tyson Foods is restructuring its portfolio to focus on protein-rich brands, which it expects could drive balanced top-line and bottom-line growth in the coming quarters. Favorable market conditions such as increased demand for beef, pork, and chicken could supplement the company’s volume growth.

However, lower average selling prices due to livestock supply, investment in the business to support innovation, higher marketing costs, and softness in its Foodservice Prepared Foods business could pressure the bottom line.

Series overview

In this series, we’ll focus on Tyson Foods’ (TSN) fiscal 2Q17 results. We’ll look at the company’s earnings, sales, segment performance, and margins. We’ll also take a look at the company’s valuation and analysts’ recommendations.

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