Tyson Foods Inc. Earnings Cheat Sheet: Margins Suffer as Costs Rise, Profit Falls

Rising costs hurt S&P 500 (NYSE:SPY) component Tyson Foods Inc. (NYSE:TSN) in the fourth quarter as profit dropped from a year earlier. 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 Fourth Quarter

Results: Net income for Tyson Foods Inc. fell to $97 million (26 cents per share) vs. $213 million (57 cents per share) a year earlier. This is a decline of 54.5% from the year earlier quarter.

Revenue: Rose 12.9% to $8.4 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: TSN fell short of the mean analyst estimate of 31 cents per share. It beat the average revenue estimate of $8.2 billion.

Quoting Management: “In fiscal 2011, we produced record sales and our second best EPS in company history despite record input costs, which included $675 million in additional feed and ingredient costs in our Chicken segment,” said Donnie Smith, Tyson’s president and chief executive officer. “This is a testament to our quality, service and innovation and our focus on business fundamentals and operational efficiencies across all segments of our business.”

Key Stats:

Gross margin shrank 4.4 percentage points to 4.6%. The contraction appeared to be driven by increased costs, which rose 18.3% from the year earlier quarter while revenue rose 12.9%.

Revenue has risen the past four quarters. Revenue increased 10.9% to $8.25 billion in the third quarter. The figure rose 15.7% in the second quarter from the year earlier and climbed 14.8% in the first quarter from the year-ago quarter.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 46 cents versus a mean estimate of net income of 40 cents per share.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved up from 37 cents a share to 38 cents over the last sixty days. In the past seven days, the average estimate for the fiscal year has declined from $1.95 per share to $1.94.

Competitors to Watch: Smithfield Foods, Inc. (NYSE:SFD), Hormel Foods Corporation (NYSE:HRL), Sanderson Farms, Inc. (NASDAQ:SAFM), Pilgrim’s Pride Corp. (NYSE:PPC), ZHONGPIN INC. (NASDAQ:HOGS), Diamond Ranch Foods, Ltd. (DRFO), Seaboard Corporation (AMEX:SEB), and Energroup Holdings Corp (ENHD).

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