Could Tyson Stock Rise on Fiscal 4Q17 Earnings?



Analysts expect strong upcoming quarter

Tyson Foods (TSN) is set to announce its fiscal 4Q17 results next week. Analysts expect the company’s sales to improve on a YoY (year-over-year) basis thanks to higher volumes and a higher average selling price. The company is witnessing increased sales across all its business segments driven by higher demand both in the US (SPY) and international markets. Plus, the company’s bottom-line results are expected to benefit from its focus on reducing costs.

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The company plans to generate cost savings of $200 million in fiscal 2018. Meanwhile, the company expects $400 million and $600 million in savings for fiscal 2019 and 2020, respectively. Tyson Foods is focusing on reinventing its supply chain and procurement process and plans to reduce its overhead costs, which could boost margins. The company is also divesting non-core business, which could further support profitability growth.

YTD stock price movement

Tyson Foods stock is up 17.0% on a YTD (year-to-date) basis as of November 6, 2017, and has outperformed the benchmark index. The S&P 500 (SPX-INDEX) has risen 15.7% during the same period. Notably, Tyson Foods stock got a significant boost after the company raised its fiscal 2017 guidance and provided an upbeat outlook for fiscal 2018.

Meanwhile, the company’s continued growth in volumes driven by higher consumption and expectation of improved profitability growth further supported the stock’s upward trend.

In comparison, Hormel Foods (HRL) stock is down about 11.6% on a YTD basis. Meanwhile, stock prices of Sanderson Farms (SAFM) and Pilgrim’s Pride (PPC) have seen strong growth since the beginning of the year.


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