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Tyson Foods Trades Lower After 4th-Quarter Earnings Miss

Before the opening bell on Tuesday, Tyson Foods Inc. (NYSE:TSN) issued its results for the fourth quarter and entire year of fiscal 2019, which ended on Sept. 28.

Shares of the Springdale, Arkansas-based global food company declined 0.28% to a price of $82.50 in pre-market trading after GAAP earnings per share of $1.01 missed consensus estimates by 25 cents and revenue of $10.88 billion fell $50 million short of projections. Year over year, GAAP earnings per share decreased by 31.3%, while revenue climbed nearly 9%.


The revenue growth was due to a 13.1% rise in chicken sales volume and a 480.3% boost in the international/other business, offsetting lower beef and prepared food sales volumes. The total average price was flat.

By segment revenue, Tyson Foods reported the following year over year changes: Beef was $3.86 billion in revenue (down 1.3%), Pork was $1.26 billion (up 10.9%), Chicken was 3.45 billion (up 10.7%), Prepared Foods was $2.15 billion in revenue (up 2.7%), International/other business added $513 million (755% advance) and Intersegment Sales generated a negative $348 million.

Relating to full fiscal 2019, total revenue of $42.41 billion gained 5.9% from full fiscal 2018. In contrast, a GAAP net income attributable to the company of $2.02 billion is 33.1% lower than the previous year, and the operating cash flow of $2.51 billion marked a drop of 15.2%. Also, the company used a total of $3.72 billion in funds for acquisitions and upgrades to property, plant and equipment.

"Fiscal 2019 was highlighted by significant progress in our strategy to grow our business through differentiated capabilities, deliver service and value to our customers, and sustain our company and our world for future generations," President and Chief Executive Officer Noel White said. "We expanded our global footprint, launched innovation in our iconic brands and our new alternative protein brand, and prepared for future growth by investing in technology and infrastructure."

Looking ahead to the full fiscal year 2020, Tyson expects a 2-3% increase in fed cattle, hog supplies and chicken production. Capital expenditures are anticipated at $1.3 billion and the effective tax rate is expected at 23.5%.

Concerning expectations for 2020, Noel White added: "We're very optimistic about fiscal 2020, and we currently expect to meet or exceed our long-term earnings algorithm of high single-digit adjusted earnings per share growth as we're well positioned to take advantage of opportunities in the global marketplace."

Analysts project adjusted earnings per share of $6.78 on $45.47 billion in revenue.

As of Sept. 28, the balance sheet had $484 million in cash on hand and equivalents, $4.11 billion in total inventories and $7.28 billion in net property, plant and equipment. Total debt amounted to $1.93 billion and total equity was worth $14.23 billion.

The share price closed at $82.73 on Monday for a market capitalization of $30.17 billion. In the past year through Nov. 11, the share price rose 42% to above the 200-day simple moving average line. It is still below the 100- and 50-day SMA lines.

The 52-week range is $49.77 to $94.07.

Tyson Foods has an overweight recommendation rating and an average target price of $94.25.

Additionally, on Dec. 13, the company will pay 37.5 cents quarterly dividend per common share to its shareholders of record as of Nov. 29. The ex-dividend date is scheduled for Nov. 27. The payment generates 1.82% yield in terms of forward and trailing 12-month dividend based on Monday's closing price.

Disclosure: I have no positions in any security mentioned.

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This article first appeared on GuruFocus.