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Can Tyson Foods Expect Higher Earnings in Fiscal 2Q16?

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Upcoming earnings release

Tyson Foods (TSN) is set to release its fiscal 2Q16 results on May 9. Management will hold a conference call after the Market opens to discuss the results.

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Earnings expectations

Wall Street analysts expect Tyson’s 2Q16 EPS (earnings per share) to come around $0.96—an increase of 27%. Analysts expect its earnings to grow at a tremendous rate throughout fiscal 2016. Its fiscal 3Q16 and 4Q16 earnings are also expected to grow by 18% and 22%. The fiscal 2016 earnings are expected to be ~$4.06—an increase of 29% compared to fiscal 2015.

How did Tyson start 2016?

Tyson started off fiscal 2016 with an optimistic outlook. It enjoyed good earnings growth of 49% in 1Q16. The EPS was ~$1.15—compared to $0.77 in 1Q15. All of Tyson’s segments had a better performance in 1Q16. This contributed to higher earnings. The rest of fiscal 2016 also looks positive for the company. A company’s good earnings growth shows its ongoing commitment to return value to investors. Its earnings also surpassed estimates by 29% in 1Q16.

Management’s outlook for earnings

During the fiscal 1Q16 earnings call, management raised its fiscal 2016 EPS guidance by 35% to $3.85–$3.95 due to its strong results in the first quarter and positive outlook for fiscal 2016. Tyson’s management had the confidence to raise its earnings guidance due to the company’s superior supply chain and consumer-relevant portfolio packed with advantaged brands in advantaged categories. This represents a 22%–25% increase over fiscal 2015.

Tyson’s peers in the meat industry include Hormel Foods (HRL), Pilgrim’s Pride (PPC), and Sanderson Farms (SAFM).

  • Hormel is expected to grow earnings by 14% in fiscal 2Q16.
  • Sanderson and Pilgrim’s Pride are estimated to report lower earnings of 48% and 29%, respectively.

The Consumer Staples Select Sector SPDR Fund (XLP) and the AdvisorShares TrimTabs Float Shrink ETF (TTFS) invest 1.3% and 1.1% in Tyson.

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