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Tyson Foods’s Revenue Is Expected to Fall 7% in Fiscal 1Q16

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Revenue estimates for fiscal 1Q16

Tyson Foods’s (TSN) revenue is expected to fall by 7.2% to $10.0 billion for fiscal 1Q16. Although positive, the revenue growth has been on a declining trend since fiscal 1Q15. For full-year fiscal 2016, the revenue is expected to be ~$39.9 billion. The company’s guidance projects revenue of ~$41 billion for fiscal 2016. The company thinks that its current businesses will grow and balance the effect of the divestitures in fiscal 2015.

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Recap of fiscal 4Q15 performance

In fiscal 4Q15, the company recorded total revenue of $10.5 billion—a 4% rise compared to the same quarter in fiscal 2014. It also beat analysts’ average estimates of $10.2 billion. The adjusted sales fell slightly to $9.8 billion compared to fiscal 4Q14. The adjusted results exclude the impact of the additional week in the fourth quarter and 12 months of fiscal 2015. The adjusted sales for fiscal 2015 were $40.6 billion—a rise of 9% compared to fiscal 2014. A full year of Hillshire Brands’s results, balanced by reductions from divestitures in international operations, drove the sales.

It reported an operating profit of $550 million in fiscal 4Q15—a rise over fiscal 4Q14. Its adjusted operating income also grew by 21% to $568 million. The adjusted results exclude the impact of the additional week in the fourth quarter and 12 months of fiscal 2015. For fiscal 2015, the adjusted operating income rose by 37% compared to fiscal 2014. The adjusted operating income was $2.4 billion. It grew for the third consecutive year.

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Other key highlights of fiscal 4Q15

The net income rose to $258 million compared to fiscal 4Q14. The gross profit also rose by $256 million in fiscal 4Q15. Tyson Foods showed improved margins in fiscal 4Q15 compared to fiscal 4Q14. The company recorded an operating cash flow of $898 million in fiscal 4Q15 and $2.6 billion in fiscal 2015. This allowed Tyson to invest in its business by reducing the net debt by $1.7 billion and repurchasing its own shares. The company spent $218 million on capital expenditures for fiscal 4Q15 and $854 million for full-year fiscal 2015. Analysts expect the margins to improve in fiscal 1Q16 compared to fiscal 1Q15. They estimate the gross, net, and operating margins to be 10.1%, 3.6%, and 6.2%, respectively.

Peers’ revenue

Tyson Foods’s peers are Campbell Soup (CPB), B&G Foods (BGS), and Flowers Foods (FLO). The revenue estimates for these companies are as follows:

  • Campbell Soup to report $2.2 billion for fiscal 2Q16
  • B&G Foods to report $304.8 million for fiscal 4Q15
  • Flowers Foods to report $905.3 million for 4Q15

The Power Shares S&P 500 Low Volatility Portfolio (SPLV) and the Power Shares Dynamic Food and Beverage (PBJ) invest 1.2% and 3.0% of their portfolios in Campbell Soup.

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