Tyson Foods, Inc. (?TSN) will release its third quarter 2014 earnings before the bell on Monday, July 18, 2014. The company is hosting a live conference call at 8:00 am, EST, on the company’s website at http://ir.tyson.com. You can attend the conference via telephone by calling 888-455-8283 and entering the passcode “Tyson Foods”.
Tyson Foods is a global supplier of beef, chicken and pork products for the retail and food service industries. The company’s headquarters is in Springdale, Arkansas, and its products sold in over 120 countries.
Analysts Expect:
- EPS ranging from $0.73 to $0.83 with a target of $0.78
- Revenue ranging from $9.3 billion to $9.7 billion with a target of $9.5 billion
Revenue/EPS Recap
Tyson Foods reported revenue of $9.0B at the end of Q2 2014, which is a 7.3 percent increase over the $8.4B reported for Q2 2013. The company fuels its growth by strategically acquiring other companies outside of its operations. Most recently, Tyson Foods made a cash offer of $8.55B to acquire The Hillshire Brand Company’s (?HSH) outstanding stock. Jimmy Dean, Ball Park and Hillshire Farms are popular prepackaged foods under the Hillshire Brand flagship. The acquisition would increase Tyson Foods’ presence in the breakfast food market and increase the number of pork products the company sells. However, the acquisition is contingent on Hillshire Brand being released from its previous offer to acquire Pinnacle Foods, Inc. (?PF).
| Revenue | Q2 2014 | Q1 1014 | Q4 2013 | Q3 2013 |
| Estimate | $8.8B | $8.8B | $8.9B | $8.6B |
| Actual | $9.0B | $8.8B | $8.9B | $8.7B |
| Difference | +200M | +0 | +0 | +100M |
Recent Events
Food item recalls are a continuing problem for Tyson Foods. The company recalled 75,000 pounds of chicken nuggets in April 2014 after bits of plastic shards was found cooked into the nuggets. In January 2014, the company voluntarily recalled 34,000 pounds of chicken potentially contaminated with the Salmonella bacteria.
On a more positive note, Tyson Foods is selling its 50 percent ownership of Dynamic Fuels this year. In 2007, Dynamic Fuels was created to benefit from the generous federal tax credits for companies investing in biofuels. The goal behind the endeavor was to take animal fat and byproducts and convert them into diesel fuel. Operations stopped when the government slashed the tax credit, and the plant fell idle. The maintenance expenses cost Tyson Foods about $1 million per month.
| EPS | Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 |
| Estimate | $0.63 | $0.64 | $0.69 | $0.59 |
| Actual | $0.60 | $0.72 | $0.70 | $0.69 |
| Difference | -0.03 | +0.08 | +0.01 | +0.10 |
The company missed its Q2 2014 EPS estimate due to increased grain costs and lower product demand.
Competitors
Tyson Foods’s primary competitors are Conagra Foods, Inc., (?CAG), Kellogg Co., (?K) and Hormel Foods Corp. (?HRL). Tyson Foods currently has the largest market share based on revenue and continues to expand its operations. However, Kellogg Co. retains more of its net income as compared to the others. Tyson Foods must increase its net income and reduce expenses if it wants to remain the market leader.
| Ă‚ | TSN | CAG | K | HRL |
| Share Price | $39.50 | $30.88 | $65.60 | $48.18 |
| Market Cap | $13.8B | $12.9B | $23.8B | $12.7B |
| Revenue (TTM) | $35.4B | $17.7B | $14.7B | $9.0B |
| Net Income (TTM) | $981M | $297.30M | $1.90B | $564.41M |
| P/E (TTM) | 14.66 | 16.12 | 12.59 | 23.04 |
| EPS (TTM) | $2.70 | $1.92 | $5.21 | $2.09 |
Technical Considerations
Analysts are very bullish on Tyson Foods. The stock started on its current uptrend on Nov. 27, 2013, at $27.56 a share before hitting $44.01 on Mar. 31, 2014. The stock fell back and consolidated at $35.15 on June 16, 2014. The stock resumed its uptrend and currently trades around $40.00. The MACD crossed over and sent out a bullish signal this month. The stock continues to trade above the 5, 10 and 20-day moving averages. This confirmed uptrend signals a buying opportunity should the company's earnings top the expected estimates.
