Tyson Foods Inc. Earnings: Margins Shrink as Net Income Drops

S&P 500 (NYSE:SPY) component Tyson Foods Inc. (NYSE:TSN) reported its results for the first 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 First Quarter

Results: Net income for Tyson Foods Inc. fell to $156 million (42 cents per share) vs. $298 million (78 cents per share) a year earlier. This is a decline of 47.7% from the year earlier quarter.

Revenue: Rose 9.4% to $8.33 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: Tyson Foods Inc. beat the mean analyst estimate of 33 cents per share. Analysts were expecting revenue of $8.28 billion.

Quoting Management: “Even with higher feed ingredient costs, our Chicken segment returned to profitability in the fiscal first quarter on improved pricing and execution,” said Donnie Smith, Tyson’s president and chief executive officer. “Prepared Foods had a strong performance, and the Pork segment continued to produce outstanding results. Our Beef segment is experiencing a rough patch as a result of challenging market fundamentals. Although we are still outperforming industry indexes, if current conditions continue, our Beef results will be pressured in our second quarter.”

Key Stats:

Gross margin shrank 3.9 percentage points to 5.9%. The contraction appeared to be driven by increased costs, which rose 14% from the year earlier quarter while revenue rose 9.4%.

Revenue has risen the past four quarters. Revenue increased 12.9% to $8.4 billion in the fourth quarter of the last fiscal year. The figure rose 10.9% in the third quarter of the last fiscal year from the year earlier and climbed 15.7% in the second quarter of the last fiscal year from the year-ago quarter.

The company topped expectations last quarter after falling short of forecasts in the fourth quarter of the last fiscal year with net income of 26 cents versus a mean estimate of net income of 32 cents per share.

Net income has dropped 7.4% year over year on average across the last five quarters. Performance was hurt by a 54.5% decline in the fourth quarter of the last fiscal year from the year earlier quarter.

Looking Forward: Expectations for the company’s next quarter results are lower than they have been. Over the past sixty days, the average estimate for second quarter has fallen from 50 cents per share to 47 cents. The average estimate for the fiscal year is $2.11 per share, a rise from $2.05 ninety days ago.

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

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com