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Tyson Foods Beat Analysts’ Q2 Estimates


May. 7 2019, Published 11:47 a.m. ET

Key takeaways

On May 6, Tyson Foods (TSN) posted better-than-expected second-quarter results for the period ending March 30. The company’s sales and earnings beat analysts’ expectations, which reflected higher volumes and an improved operating margin in the beef, pork, and prepared foods segments.

Tyson Foods’ top line rose 6.9% on a YoY (year-over-year) basis and beat analysts’ expectation, which reflected strong growth in the beef and chicken segment. However, the lower average pricing continued to hurt.

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Tyson Foods’ adjusted operating income fell ~5%, which reflected declines in the chicken segment. The chicken segment’s operating income took a hit from an 11.0% decline in the average selling price.

The second-quarter adjusted earnings beat analysts’ estimate. However, the earnings continued to decline on a YoY basis, which reflected margin compression, lower net price realization, and higher feed ingredient costs.

Tyson Foods is expected to benefit from the outbreak of African swine fever in China. The outbreak will likely push the demand for alternative proteins like chicken and pork. However, the prepared food segment’s margins could be impacted, which would reflect higher pork and beef prices.

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Stock performance  

Tyson Foods shares closed 2.6% higher due to its better-than-expected earnings. Tyson stock has risen 44.3% on a YTD (year-to-date) basis as of May 6. Most of the food companies have outperformed the benchmark index this year and have recorded substantial gains.

Conagra Brands (CAG), General Mills (GIS), J.M. Smucker (SJM), and Mondelēz International (MDLZ) shares have risen 39.5%, 32.1%, 33.9%, and 28.9%, respectively. The S&P 500 Index has risen 17.0% this year.


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