Tyson Foods (TSN) Q4 Earnings Decline Expected: Time You Sell?

in EARNINGS/INVESTING IDEAS by

Beyond Meat is the leader as of now in plant-based meat products. But companies like Tyson, Hormel FoodsKellogg, and Conagra are introducing similar offerings of their own.

Tyson announced in June that it would be introducing a new Raised & Rooted meat alternative brand.  Raised & Rooted’s first product is a pea-based chicken nugget alternative. The growth in plant-based meat product is the key storyline in the space and analysts will be watching closely for Tyson management’s comments on progress during the earnings call.

Tyson Foods, Inc. (NYSE:TSN) is scheduled to report Q4 earnings results pre-market open on November 12, 2019. The company is expected to report earnings of $1.27/share on revenue of $10.959 billion. The consensus earnings per share (EPS) of $1.27/share is based on a poll of 12 analysts and represents a decline of -19.6% over the same quarter last year when the company reported earnings of $1.58/share.

The revenue forecast of $10.959 billion based on a poll of 10 analysts implies a year-over-year (YoY) growth of 9.6%. Last year the company reported $9.999 billion in revenue for the quarter.

Expected to report EPS decline of -$0.31/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $10,959.33 $9,999.00 9.6%
EPS $1.27 $1.58 -19.6%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Tyson Foods for this earnings this quarter? Let us know in the comments!

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $1.43 $1.47 2.8% Beat
Q2, 2019 $1.15 $1.20 4.3% Beat
Q1, 2019 $1.59 $1.58 -0.6% Missed
Q4, 2018 $1.38 $1.58 14.9% Beat
Q3, 2018 $1.39 $1.50 7.9% Beat
Q2, 2018 $1.30 $1.27 -2.3% Missed
Q1, 2018 $1.49 $1.81 21.5% Beat
Q4, 2017 $1.37 $1.43 4.4% Beat

One question we always consider here at the Bankers’ Tribune is how important are earnings reports to Tyson Foods’s stock price performance? It’s more important for some companies than for others. In the following table, we summarize the company’s stock price movements after earnings releases.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-05 $79.76 $85.02 6.6% Increase
2019-05-06 $75.09 $76.85 2.3% Increase
2019-02-07 $60.90 $59.29 -2.6% Decline
2018-11-13 $61.61 $58.76 -4.6% Decline

The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 29, 2019, the stock price reacted by increasing by 6.6%.

Fundamentals And Technical Analysis

Tyson Foods is currently trading at $82.73/share, up 0.1% for the day. The company is trading at approximately 87.9% of its 52 week high of $94.07/share. The company’s stock price is up 3.7% since the last earnings report and down -1.3% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 49.13 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 13.7x and a forward P/E multiple of 15.0x. Tyson Foods’s current share price also implies a price-to-book (P/B) multiple of 2.2x. The stock currently has a dividend yield of 1.8%. The following table summarizes some other key fundamental ratios:

Data as of November 11, 2019
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date June 29, 2019
Stock Price (Current) $82.73
P/E Ratio 13.7x
P/E Ratio (Fwd) 15.0x
PEG Ratio 0.8
Total Debt to Capital (%) 29.3%
Levered Free Cash Flow $1.290 billion
Enterprise Value / EBITDA 10.3x

Company Profile: Tyson Foods, Inc.

Tyson Foods, Inc. is a large-cap stock with a market capitalization of $30.134 billion and a total enterprise value of $42.526 billion. The company operates in the Consumer Staples sector and Food Products industry.

Tyson Foods, Inc., together with its subsidiaries, operates as a food company worldwide. It operates through four segments: Beef, Pork, Chicken, and Prepared Foods. The company processes live fed cattle and live market hogs; fabricates dressed beef and pork carcasses into primal and sub-primal meat cuts, as well as case ready beef and pork, and fully-cooked meats; and raises and processes chickens into fresh, frozen, and value-added chicken products. It also supplies poultry breeding stock; sells allied products, such as hides and meats; and manufactures and markets frozen and refrigerated food products, including ready-to-eat sandwiches, flame-grilled hamburgers, Philly steaks, pepperoni, bacon, breakfast sausage, turkey, lunchmeat, hot dogs, flour and corn tortilla products, appetizers, snacks, prepared meals, ethnic foods, side dishes, meat dishes, breadsticks, and processed meats.

The company offers its products primarily under the Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells, ibp, State Fair, Gallo Salame, and Golden Island brands. It sells its products through its sales staff to grocery retailers, grocery wholesalers, meat distributors, warehouse club stores, military commissaries, industrial food processing companies, chain restaurants or their distributors, live markets, international export companies, and domestic distributors who serve restaurants and foodservice operations, such as plant and school cafeterias, convenience stores, hospitals, and other vendors, as well as through independent brokers and trading companies.

The company has a collaboration with IdentiGEN Ltd. Tyson Foods, Inc. was founded in 1935 and is headquartered in Springdale, Arkansas.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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