Could TSN Stock Gain Momentum from Its Fiscal 3Q17 Results?



Factors impacting TSN stock

Tyson Foods (TSN) stock took a beating following its sluggish fiscal 2Q17 results. The company witnessed lower volumes despite high demand for meat products such as beef, pork, and chicken. A decline in live cattle processed and fires at two of its chicken plants adversely impacted its volume growth.

Lower average selling prices dragged Tyson Foods’ sales down. Meanwhile, sales deleverage and increased operational costs, including higher marketing and advertising spending, pressured margins.

Tyson Foods (TSN) stock showed recent signs of recovery in anticipation of better results in 2H17. Despite the second quarter’s hiccup, management stood by its earlier guidance and expects strong growth in its bottom line for fiscal 2017.

Tyson Foods’ management projects its sales to improve on the back of a rise in volumes and a focus on its core protein-rich brands. Low livestock prices are expected to boost the company’s margins. However, lower average selling prices and increased marketing spending could remain a drag.

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YTD stock performance

On July 31, 2017, Tyson Foods stock gained 2.7% on a YTD (year-to-date) basis. However, it underperformed the S&P 500 Index (SPX-INDEX), which was up about 10.3% during the same period.

The company also lagged most of its peers in terms of stock price gains. On a YTD basis, Sanderson Farms (SAFM) and Pilgrim’s Pride (PPC) stock rose 38.7% and 27.9%, respectively, as meat producers are expected to report strong margin growth. Lower feed costs and increased demand could drive their profitability. In contrast, Hormel Foods (HRL) stock fell 1.8% on a YTD basis.

Series overview

Tyson Foods (TSN) plans to report its fiscal 3Q17[1. fiscal 3Q17 ended June 2017] sales and earnings results on August 7. We’ll focus on analysts’ estimates for Tyson Foods’ top and bottom lines in this series. We’ll also take a look at the current analysts’ recommendations for TSN stock.


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