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Tyson Foods Beats Q3 Earnings Estimates, Stock Jumps

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Tyson Foods Beats Q3 Earnings Estimates, Stock Jumps PART 1 OF 5

Tyson Foods Beats Q3 Earnings Estimates, Stock Jumps

TSN stock rose after its earnings release

Tyson Foods (TSN) posted strong fiscal 3Q17 results, and the company’s stock rose 5.7 %. Tyson Foods’ fiscal 3Q17 top- and bottom-line results beat analysts’ estimates and improved on a YoY (year-over-year) basis. Strong volumes, led by increased local and international demand and higher pricing, drove the company’s fiscal 3Q17 results. Management expects strong demand for protein-rich foods to continue to drive top-line growth in the coming quarters. Plus, low livestock prices are projected to boost margins.

Tyson Foods Beats Q3 Earnings Estimates, Stock Jumps

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YTD stock performance

Year-to-date, Tyson Foods’ (TSN) stock has risen 8.5% through August 7, 2017. However, TSN stock lags the S&P 500 Index (SPX) and most of its peers in terms of returns.

Since the beginning of the current year, the S&P 500 Index (SPX) has generated a return of 10.8%. Meanwhile, Pilgrim’s Pride (PPC) and Sanderson Farms (SAFM) stocks rose 37.0% and 44.9%, respectively. Hormel Foods (HRL) stock is down 1.8% on a YTD basis.

Meat producers such as Sanderson Farms and Pilgrim’s Pride are projected to benefit from lower feed costs and ample supply of livestock, which should accelerate margins for these companies. Meanwhile, continued strong demand further supports profitability growth, which reflects in these companies’ stock prices.

As for Tyson Foods, the company is reinventing its portfolio to focus on protein-rich brands and exiting non-core businesses. Meanwhile, favorable market conditions—including higher demand for pork, beef, and chicken—should help drive balanced top- and bottom-line growth.

However, the company’s increased investment in business to support innovation, higher marketing spending, and softness in its Foodservice category could pressure margins and, in turn, the bottom line.

Series overview

In this series, we’ll analyze Tyson Foods’ (TSN) fiscal 3Q17 results. We’ll also discuss the latest analyst recommendations and valuations for TSN stock.

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