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RBC Capital Markets Downgrades Tyson Foods’ Rating

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Jan. 12 2016, Updated 4:45 p.m. ET

Price movement of Tyson Foods

Tyson Foods (TSN) fell by 1.2% to close at $52.3 per share as of January 5, 2016. The stock’s price movements on a weekly, monthly, and year-to-date (or YTD) basis are -1.9%, -0.59%, and -1.9%, respectively.

Currently, TSN is trading 1.7% below its 20-day moving average, 6.1% above its 50-day moving average, and 19.5% above its 200-day moving average.

The PowerShares DWA Consumer Staples Momentum ETF (PSL) invests 3.7% of its holdings in Tyson Foods. The ETF tracks an index of US consumer cyclical companies selected and weighted by price momentum.

The VanEck Vectors Agribusiness ETF (MOO) invests 3.5% of its holdings in Tyson Foods. The ETF tracks a market-cap–weighted index of companies that generate more than 50% of their revenues in the agribusiness sector.

The competitors of Tyson Foods and their market capitalizations are as follows:

  • Hormel Foods (HRL) — $20.7 billion
  • Pilgrim’s Pride (PPC) — $5.9 billion
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RBC Capital Markets’ rating for Tyson Foods

RBC Capital Markets downgraded Tyson Foods from “outperform” to “sector perform” and set a price target of $53.0 per share.

Performance of Tyson Foods in fiscal 4Q15 and fiscal 2015

Tyson Foods reported 4Q15 net sales of $10,506.0 million, a rise of 4.0% when compared to net sales of $10,105.0 million in fiscal 4Q14. Its net income and EPS (earnings per share) rose to $258.0 million and $0.63, respectively, in fiscal 4Q15, compared to net income and EPS of $137.0 million and $0.35, respectively, in fiscal 4Q14.

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Fiscal 2015

In fiscal 2015, TSN reported net sales of $41,373.0 million, a rise of 10.1% YoY (year-over-year). Its net income and EPS rose to $1,220.0 million and $2.95, respectively, in fiscal 2015, compared to net income and EPS of $864.0 million and $2.37, respectively, in fiscal 2014.

TSN’s PE (price-to-earnings) and PBV (price-to-book value) ratios are 17.7x and 2.2x, respectively, as of January 8, 2016.

Projections

The company has made the following projections for fiscal 2016:

  • Sales are expected to be ~$41 billion.
  • Capital expenditure is expected to be ~$900 million.

TSN expects to increase share repurchases under its share repurchase program. In fiscal 1Q16 as of November 20, 2015, it repurchased ~4.4 million shares for $200 million, excluding shares repurchased to offset dilution from equity compensation plans.

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