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Why Analysts Expect Tyson Foods’ 3Q17 Earnings to Fall

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Dec. 4 2020, Updated 10:53 a.m. ET

What analysts project for fiscal 3Q17

Tyson Foods (TSN) plans to report its fiscal 3Q17[1. fiscal 3Q17 ended June 2017] earnings results on August 7, 2017. Analysts expect Tyson Foods to post adjusted EPS (earnings per share) of $1.18, a YoY (year-over-year) decline of 2.5%. 

Low average selling prices, higher operational and marketing costs, and challenges with its Foodservice channel is expected to adversely impact its profitability.

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Factors to impact EPS

Notably, the profitability of meat producers is projected to benefit from lower feed prices due to increased agricultural production. Meanwhile, the growing demand for protein, especially chicken, could boost its EPS growth.

Analysts expect the company’s peers, including Sanderson Farms (SAFM) and Pilgrim’s Pride (PPC), to register strong double-digit growth in their bottom lines for the upcoming quarter. Meanwhile, Hormel Foods’ (HRL) earnings per share are anticipated to grow in the mid-single digits in its upcoming quarter.

As for Tyson Foods, the company’s EPS could gain from lower feed costs and higher demand for chicken. The availability of livestock could help drive its profitability growth. 

However, the majority of the company’s sales come from its Beef, Pork, and Prepared Foods segments, which have posted lower volumes during the last reported quarter. Moreover, lower average selling prices due to a supply glut could pose additional challenges.

During its fiscal 2Q17 conference call, Tyson Foods’ management stated that favorable market conditions, including the availability of livestock and increased demand, could fuel the company’s EPS growth. Meanwhile, an improved mix and higher selling prices in the Pork segment could positively impact the company’s bottom line.

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