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A Look at Tyson Foods’ Performance in Fiscal 3Q16

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Aug. 11 2016, Updated 8:06 a.m. ET

Price movement

Tyson Foods (TSN) has a market cap of $27.4 billion. Its stock rose by 0.58% to close at $74.07 per share on August 8, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -0.28%, 7.5%, and 39.5%, respectively, on the same day. TSN is trading 3.3% above its 20-day moving average, 11.1% above its 50-day moving average, and 23.4% above its 200-day moving average.

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Related ETF and peers

The iShares Morningstar Mid-Cap ETF (JKG) invests 1.3% of its holdings in Tyson Foods. The ETF tracks a market cap–weighted index of US mid-cap firms that exhibit both growth and value characteristics, as determined by multifactor selection. The YTD price movement of JKG was 10.2% on August 8.

The market caps of Tyson Foods’ competitors are as follows:

  • Hormel Foods Corporation (HRL): $19.7 billion
  • Pilgrim’s Pride Corporation (PPC): $5.8 billion
  • Sanderson Farms (SAFM): $2.0 billion

Tyson Foods’ performance in fiscal 3Q16

Tyson Foods reported fiscal 3Q16 sales of $9.4 billion, a fall of 6.9% compared to sales of $10.1 billion in fiscal 3Q15. The sales of chicken, beef, and prepared foods fell by 0.51%, 12.1%, and 0.06%, respectively, and the sales of the pork segment rose by 5.3% in fiscal 3Q16, compared to fiscal 3Q15. The company’s gross profit margin and operating income rose by 33.0% and 36.2%, respectively, in fiscal 3Q16, compared to the prior year’s corresponding period.

The company’s net income and EPS (earnings per share) rose to $484.0 million and $1.25, respectively, in fiscal 3Q16, compared to $343.0 million and $0.83, respectively, in fiscal 3Q15. It reported adjusted EPS of $1.21, a rise of 51.3% compared to fiscal 3Q15.

TSN’s cash and cash equivalents fell by 71.4%, and its inventories rose by 1.4% in fiscal 3Q16, compared to fiscal 4Q15. Its current ratio rose to 1.8x, and its DE (debt-to-equity) ratio fell to 1.3x in fiscal 3Q16, compared to current and DE ratios of 1.5x and 1.4x, respectively, in fiscal 4Q15.

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Quarterly dividend

Tyson Foods declared quarterly dividends of $0.15 per share on its Class A common stock and $0.135 per share on its Class B common stock. The dividends will be paid on December 15, 2016, to shareholders of record at the close of business on December 1, 2016.

Projections

The company has made the following projections for fiscal 2016:

  • sales of ~$37 billion
  • capital expenditure of ~$725 million
  • net interest expense of ~$245 million
  • adjusted EPS in the range of $4.40–$4.50
  • chicken segment operating margin of more than 12%
  • beef segment operating margin in the range of 1.5%–3.0%
  • pork segment operating margin of more than 10%
  • prepared foods segment operating margin at the low end of 10%–12%.

The company has made the following projections for fiscal 2017:

  • sales growth of 1%
  • interest expense of $225 million
  • pork segment operating margin above 6%–8%

In the next part of this series, we’ll look at Carter’s (CRI).

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