Tyson Foods Earnings: Rising Profits Satisfy Investors

S&P 500 (NYSE:SPY) component Tyson Foods Inc. (NYSE:TSN) reported net income above Wall Street’s expectations for the second quarter. Tyson Foods and its subsidiaries produce, distribute and market chicken, beef, pork, prepared foods and related products.

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Tyson Foods Earnings Cheat Sheet for the Second Quarter

Results: Net income for Tyson Foods Inc. rose to $166 million (44 cents per share) vs. $159 million (42 cents per share) in the same quarter a year earlier. This marks a rise of 4.4% from the year-earlier quarter.

Revenue: Rose 3.4% to $8.27 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Tyson Foods Inc. beat the mean analyst estimate of 38 cents per share. It fell short of the average revenue estimate of $8.49 billion.

Quoting Management: “Our multi-protein business again proved advantageous, producing solid earnings for the fiscal second quarter,” said Donnie Smith, Tyson’s president and chief executive officer. “We were pleased with the rate of improvement in our Chicken business. The Chicken, Pork and Prepared Foods segments all were in or above their normalized operating margin ranges, while Beef essentially broke even despite extremely challenging market conditions.”

Key Stats:

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 0.2 percentage point from the year-earlier quarter to 6.5%. In that span, margins have contracted an average of 2.7 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 9.4% to $8.33 billion in the first quarter. The figure rose 12.9% in the fourth quarter of the last fiscal year from the year earlier and climbed 10.9% in the third quarter of the last fiscal year from the year-ago quarter.

Last quarter’s profit increase breaks a streak of three consecutive quarters of year-over-year profit decreases. In the first quarter, net income fell 47.7% from the year earlier, while the figure dropped 54.5% in the fourth quarter of the last fiscal year and 21% in the third quarter of the last fiscal year.

The company has beaten estiamtes for two quarters in a row. In the first quarter, it topped expectations with net income of 42 cents versus a mean estimate of net income of 33 cents per share.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the third quarter is 56 cents per share, down from 65 cents ninety days ago. The average estimate for the fiscal year is $1.99 per share, down from $2.09 ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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