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How Did Tyson Foods Perform in Fiscal 4Q16?

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Price movement

Tyson Foods (TSN) has a market cap of $21.0 billion. It fell 14.5% to close at $57.60 per share on November 21, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -15.9%, -17.2%, and 8.7%, respectively, on the day.

TSN is trading 16.4% below its 20-day moving average, 19.4% below its 50-day moving average, and 15.8% below its 200-day moving average.

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Related ETF and peers

The iShares Morningstar Mid Core ETF (JKG) invests 1.3% of its holdings in Tyson Foods. The YTD price movement of JKG was 10.1% on November 21.

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

  • Hormel Foods (HRL) — $18.7 billion
  • Pilgrim’s Pride (PPC) — $4.7 billion
  • Sanderson Farms (SAFM) — $1.8 billion

Performance of Tyson Foods in fiscal 4Q16

Tyson Foods reported fiscal 4Q16 sales of $9.2 billion, a fall of 12.8% compared to its sales of $10.5 billion in fiscal 4Q15. Sales in its Chicken, Beef, Prepared Foods, and Pork segments fell 7.0%, 21.2%, 8.5%, and 5.8%, respectively, in fiscal 4Q16 compared to fiscal 4Q15.

Tyson’s gross profit margin and operating margin expanded 250 basis points and 120 basis points, respectively, in fiscal 4Q16 compared to the prior year’s period. Its net income and EPS (earnings per share) rose to $391.0 million and $1.03, respectively, in fiscal 4Q16, compared to $258.0 million and $0.63, respectively, in fiscal 4Q15. It reported adjusted EPS of $0.96 in fiscal 4Q16, a rise of 15.7% compared to fiscal 4Q15.

During fiscal 4Q16, the company repurchased 8.3 million shares worth $600 million to offset dilution from its equity compensation plan.

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Fiscal 2016 results

In fiscal 2016, TSN reported sales of $36.9 billion, a fall of 10.9% YoY (year-over-year). The company’s gross profit margin and operating margin expanded 320 basis points and 250 basis points, respectively, in fiscal 2016. Its net income and EPS rose to $1.8 billion and $4.53, respectively, in fiscal 2016, compared to $1.2 billion and $2.95, respectively, in fiscal 2015. It reported adjusted EPS of $4.39 in fiscal 2016, a rise of 39.4% YoY.

TSN’s cash and cash equivalents and inventories fell 49.3% and 5.1%, respectively, in fiscal 2016. Its current ratio rose to 1.8x, and its debt-to-equity ratio fell to 1.3x in fiscal 2016, compared to its current and debt-to-equity ratios of 1.5x and 1.4x, respectively, in fiscal 2015.

Quarterly dividend

Tyson Foods declared a quarterly dividend of $0.23 per share on its Class A common stock and $0.20 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

Tyson Foods has made the following projections for fiscal 2017:

  • flat sales growth
  • EPS of $4.70–$4.85
  • capital expenditure of ~$1.0 billion

For an ongoing analysis of this sector, visit Market Realist’s Consumer Discretionary page.

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