It has been about a month since the last earnings report for Tyson Foods (TSN). Shares have added about 6.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Tyson due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
TSN's Q1 Earnings & Sales Beat Estimates on Solid Protein Demand
Tyson Foods began fiscal 2025 on a robust note, with the first-quarter top and bottom lines improving year over year and cruising past the Zacks Consensus Estimate. Tyson Foods posted adjusted earnings of $1.14 per share, which crushed the Zacks Consensus Estimate of 79 cents. The bottom line increased around 65% from the year-ago quarter’s reported figure of 69 cents.
Total sales of $13,623 million increased 2.3% from the year-ago quarter figure. The top line surpassed the Zacks Consensus Estimate of $13,476 million. Average price changes had a 0.7% positive impact on the top line, while total volumes grew 1.6% year over year. The gross profit in the quarter was $1,095 million, up from the $823 million reported in the year-ago period.
Tyson Foods’ adjusted operating income soared 60% to $659 million from the $411 million reported in the year-ago period. The adjusted operating margin expanded to 4.8% from 3.1% recorded in the year-ago quarter.
Decoding TSN’s Segmental Details
Beef: Sales in the segment increased to $5,335 million from $5,023 million reported in the year-ago quarter. Volumes rose 5.6%, and the average price jumped 0.6% in the segment.
Pork: Sales in the segment rose to $1,617 million from $1,517 million reported in the year-ago quarter. Volumes fell 0.4%, but the average price increased 7%.
Chicken: Sales in the segment improved to $4,065 million from $4,033 million reported in the year-ago quarter. Sales volumes grew 1.5%, while the average price was down 0.7%.
Prepared Foods: Sales in the segment came in at $2,473 million, down from $2,543 million reported in the year-ago quarter. Volumes dipped 3.2%, and the average price rose 0.4%.
International/Other: Sales in the segment were $584 million compared with $582 million reported in the year-ago quarter. Volumes jumped 4.3%, whereas the average sales price fell 4%.
Tyson Foods’ Other Financial Updates
The company exited the quarter with cash and cash equivalents of $2,292 million, long-term debt of $9,711 million and total shareholders’ equity (including non-controlling interests) of $18,627 million. For the three months ended Dec. 28, 2024, cash provided by operating activities amounted to $1,031 million.
Liquidity was nearly $4.5 billion as of Dec. 28. Management expects liquidity to stay above the company’s minimum target of $1 billion in fiscal 2025. Tyson Foods projects capital expenditure to be nearly $1-$1.2 billion for the fiscal. Free cash flow in fiscal 2025 is expected to come in the range of $1-1.6 billion.
What to Expect From TSN in FY25?
For fiscal 2025, the United States Department of Agriculture (“USDA”) suggests domestic protein production (beef, pork, chicken and turkey) to increase around 1% from the fiscal 2024 level.
For the Beef segment, the USDA projects domestic protein production for beef to decline nearly 1% year over year in fiscal 2025. For Pork, the USDA projects domestic production to jump nearly 2%. For Chicken, USDA expects projects domestic protein production to grow about 2% year over year. Management anticipates improved adjusted results from the company’s foreign operations during fiscal 2025.
Total company revenue growth is anticipated to come in the range of flat to increase 1% in fiscal 2025 versus fiscal 2024 levels. Adjusted operating income is envisioned in the $1.9-$2.3 billion band. Segment-wise, management expects a fiscal 2025 adjusted operating loss in the band of $0.4-$0.2 billion for the Beef segment. For the Pork, Chicken and Prepared Foods segments, Tyson Foods envisions fiscal 2025 adjusted operating income of $0.1-$0.2 billion, $1-$1.3 billion and $0.9-$1.1 billion, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 14.72% due to these changes.
VGM Scores
At this time, Tyson has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Tyson has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
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