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Tyson Foods (TSN) Tops Q1 Earnings & Revenues, Raises FY View

Zacks Equity Research

Tyson Foods, Inc. TSN posted first-quarter fiscal 2017 results, wherein both earnings and revenues beat the Zacks Consensus Estimate.

In the fiscal first quarter, adjusted earnings of $1.59 per share beat the Zacks Consensus Estimate of $1.27 by 25.1% and surged 38% from the year-ago tally of $1.15 on higher margins.

Revenues and Margins

Net sales inched up 0.3% to $9.182 billion on the back of higher sales across most of the segments like chicken, pork and prepared foods. However, this was offset by lower sales in beef and other segments. Sales beat expectation of $9.03 billion. Sales volume gained 2.4%, while average sales price (ASP) edged down 2%.

Tyson's adjusted operating income gained 27% to $982 million owing to lower feed costs. Adjusted operating margin inflated 220 basis points (bps) to 8.7%.

Segment Details

Chicken: Sales at this segment remained gained 2.7% year over year to $2.706 billion backed by 1.3% dip in sales volume and a 1.4% gain in average price. Sales volume gained as a result of better demand for chicken products, partially neutralized by decrease in rendered product sales. Average sales price increased as a result of sales mix changes which offset general market price declines.

Tyson Foods, Inc. Price, Consensus and EPS Surprise

Tyson Foods, Inc. Price, Consensus and EPS Surprise | Tyson Foods, Inc. Quote

Beef: Sales at this segment declined 2.4% year over year to $3.528 billion, owing to 6.6% drop in average sales price which negated a 4.5% increase in volume.

Pork: Pork segment sales were up 3.2% year over year to $1.252 billion driven by a 4.3% increase in sales volume and a 1% decline in average price.

Prepared Foods: Sales at Prepared Foods remained flat year over year at $1.895 billion as 2.6% gain in volume was offset by 2.9% decline in ASP. Adjusted sales volume grew on higher demand.

Other: In the fiscal first quarter, the company’s International segment was shifted under ‘Other’ following the sale of Mexico and Brazil chicken operations in fiscal 2015. Further, the Other segment includes foreign operations related to raising and processing live chickens in China and India as well as a third-party merger and integration costs.

Sales decreased to $90 million from $99 million in the year-ago quarter.

Fiscal 2017 Guidance

The company raised fiscal 2017 guidance in sync with the earnings call following a solid start to the year. The company anticipates earnings to remain in the range $4.90–$5.05, representing a 12% increase year over year compared with a range of $4.7–$4.85 expected earlier.

Financial Update

Tyson exited the quarter with a cash and cash equivalent of $3.07 million compared with $3.49 million expected earlier. The company had a long-term debt of $5.09 million compared with $6.2 million in the previous quarter.

Zacks Rank

Tyson currently carries a Zacks Rank #3 (Hold).

Helen of Troy Ltd. HELE carries a Zacks Rank #2 (Buy) and has an expected earnings growth rate of 10.8%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Pinnacle Foods Inc. PF also carries a Zacks Rank #2 and has an expected earnings growth rate of 8.3%.

Con Agra Foods Inc. CAG, another Zacks Rank #2 stock, has an expected earnings growth rate of 8%.

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