|New Threads Only:|
|New Threads & Replies:|
Forum List » Value Ideas and Strategies|
Share and discuss value investing ideas and investing strategies.
Promising 2014 Ahead for This Leading Meat Processor
Posted by: abirk (IP Logged)
Date: February 13, 2014 03:32PM
Since 2009, Tyson Foods Inc. (TSN) has made a turnaround. It is an integrated producer, processor, and marketer of chicken and poultry-based food products. The company operates in four segments: Chicken, Beef, Pork and Prepared Foods. It supplies chicken products through food service, retail grocery stores, club stores and international distribution channels. Tyson is the largest protein processor in the U.S. (where the core business is chicken), and its common stock offers a good investment opportunity. This Springdale, Ark.-based company also makes corn and flour tortillas under the Mexican Original brand and through its subsidiary Cobb Vantress, a chicken breeding stock supplier.
Numbers at a Glance
Tyson is the largest publicly traded meat processor and marketer in the U.S., and the second largest in the world (behind only Brazilian JBS SA). In its first-quarter earnings (declared on Friday, Jan. 31, 2014), the company repurchased 4.6 million shares for $150 million. EPS were up 47% to $0.72 compared to $0.49 in the first quarter of the prior year. Sales were about $8.8 billion, which represents an increase of 4.7% over the first quarter of the prior year. Operating income increased 36% to $412 million, and overall operating margin was 4.7%. Adjusted earnings were of 72 cents per share. All these positive numbers contributed a net profit of $254 million, which is substantially higher than last year's $173 million. Tyson had a very good operating cash flow of $361 million. The company’s total capital expenditures in quarter one of fiscal year 2014 were just $140 million, and this gave more free cash flows which are used for the share repurchase program.
In fiscal 2014, the company expects to increase the overall domestic protein production (chicken, beef, pork and turkey) by 1% from fiscal 2013 levels. Grain supplies are expected to increase in fiscal 2014, which should result in lower input costs. Tyson expects fiscal 2014 capital expenditures to approximate $700 million, and approximate net interest expense will be $100 million. The company expects that grain supplies will increase in fiscal 2014, which should result in lower input costs. Tyson also expects sales to be around $36 billion, up 5% over fiscal 2013 backed by strong demand for the company’s products. The company is confident of achieving at least 10% earnings growth in fiscal 2015.
On Feb. 5, 2014, Tyson Foods announced the addition of a new line of breakfast items to its product offerings with Tyson® Day StartsTM products. In conjunction with the launch of Day StartsTM, the company is also partnering with Florida Orange Juice to help spread the word about the importance of consuming a healthful morning meal.
In June 2013, Tyson Foods Inc. announced the acquisition of assets of Circle Foods LLC, and on Jan 20, 2014, the company took over Warren, Mich.-based pizza maker Bosco's Pizza Company. These acquisitions will help to boost earnings in the coming quarters.
Head to Head
Compared to its peers, Tyson has the diversification advantage as it provides the commodity raw pork, poultry and beef as well as value-added processed meat. From the above chart, it is clear that Tyson has the largest geographic reach in the U.S.
Wings Across the World
Tyson foods is the second-largest food production company in the Fortune 500 list with approximately 115,000 team members worldwide. It has 57 chicken plants, 13 beef plants, 9 pork plants and 25 prepared foods plants worldwide. The company has its wings in Brazil, India, China and Mexico.
In India at a Glance
Tyson partnered with Godrej India, and their joint venture Godrej Tyson Foods Ltd. was the first company to market fresh chilled chicken in India. The company is focused on serving the growing demand for quality poultry in India and have branded lines for chicken and vegetarian proteins. In India, Tyson markets its products in the name of Yummiez brand. Currently in India, Mumbai and Bangalore threre are two plants for Godrej Tyson Foods Ltd.
Tyson was impacted last year when an avian flu scare kept Chinese consumers away from chicken products. Despite this mishap, Tyson managed to provide positive numbers.
On a Concluding Note
Tyson Foods is diversified across the major meat types (poultry, pork and beef) and therefore, this leading meat processor is well positioned to meet changes in tastes for meat. Other remarkable advantages are its profit margins are normalizing, and it is continuing to innovate and invest in value-added businesses, which could bring even more shareholder value in the future.
Overall, Tyson Foods has a strong financial position, and enough room for its international exposure. Therefore, it can be said that this company will provide good food to its valued customers and pocketful of return to its investors in the near future.
Stocks Discussed: TSN, SFD, HRL, PPC,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.