Springdale, Arkansas-based Tyson Foods, Inc. (TSN) produces, distributes, and markets chicken, beef, pork, prepared foods, and related allied products. Valued at $22.32 billion by market cap, TSN is one of the world’s largest food companies and a recognized leader in protein. Its products are marketed and sold to national and regional grocery retailers, regional grocery wholesalers, meat distributors, warehouse club stores, military commissaries, and industrial food processing companies.
Shares of this meat-producing giant have underperformed the broader market considerably over the past year. TSN has gained 9.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 16.1%. However, in 2024, TSN’s stock is up 14.7%, surpassing the SPX’s 9% rise on a YTD basis.
Narrowing the focus, TSN’s outperformance is apparent compared to the S&P 500 Cons Staples Sector SPDR’s (XLP). The exchange-traded fund has gained about 5.3% over the past year. Moreover, TSN’s double-digit returns on a YTD basis outshine the ETF’s 9.1% gains over the same time frame.
On Aug. 5, TSN shares closed up more than 2% after the company reported its Q3 results. Its adjusted EPS of $0.87 topped Wall Street expectations of $0.61. The company’s revenue stood at $13.35 billion, up 1.6% year over year. Its adjusted operating income increased 174.3% from the prior-year quarter to $491 million. For fiscal 2024, the United States Department of Agriculture (USDA) indicates domestic protein production should increase slightly compared to fiscal 2023 levels and expects pork production to grow 3% as compared to fiscal 2023.
Moreover, the company expects adjusted operating income to be between $1.60 billion and $1.80 billion, while sales are expected to be relatively flat in fiscal 2024 as compared to fiscal 2023. For fiscal 2024, TSN expects capital expenditures to be between $1.20 billion and $1.30 billion.
For the current fiscal year, ending in September, analysts expect TSN’s EPS to grow 94.8% to $2.61 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the eight analysts covering TSN stock, the consensus rating is a “Moderate Buy.” That’s based on two “Strong Buy” ratings and six “Holds.”
This configuration is slightly less bullish than three months ago, with three suggesting a “Strong Buy.”
Recently, BofA maintained a “Neutral” rating on TSN stock and lowered the price target from $62 to $60, implying a potential downside of 4% from current levels.
The mean price target of $60.44 represents a 3.3% downside to TSN’s current price levels. However, the Street-high price target of $72 suggests an upside potential of 15.2%.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
