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This Food Company Is Primed for Long-Term Growth

August 31, 2014 | About:

The world's second-largest meat processor, Tyson Foods (NYSE:TSN), released impressive results for the second from last quarter. The organization reported fantastic development in its top line and its results came in line with expectations. More noteworthy interest for chicken and pork products were the principle development drivers for the organization. There are numerous key points Tyson Foods is relying on, which can take its development to another level. With rising interest for meat products and the proposed selling of Latin American chicken operations, Tyson Foods is required to show signs of improvement later on.

Doing great

Tyson is seeing a strong fiscal year so far. Its quarterly revenue enhanced by 11% to $9.63 billion. This topped analysts' estimates. Consensus had been displaying revenue of $9.5 billion. Chicken and pork products were the best sellers for Tyson, and they resulted in a solid change in its earnings. The earnings of the organization developed by 9%, reporting EPS of $0.75 per share, which was more than $0.69 per share from last year's same quarter.

Tyson Foods, having conveyed a praiseworthy performance in the second from last quarter, is good to go to quicken to new highs. Administration is optimistic about its development prospects. Tyson is focusing on essential development drivers, and is wanting to sell some of its less favored units such as the Latin American chicken operations. Despite the fact that it is performing well, Tyson thinks that organization can even perform better without it so it plans to sell this operation to JBS.

Besides, Tyson is also focusing on its home market. It is selling off its universal operations and plans to use the cash to pay off the acquisition charges of Jimmy Dean sausage creator Hillshire Brands Co.

Making the business productive

Further, it has affirmed the shutdown of three of its plants. With this, Tyson Foods is going for restructuring its utilities and getting to be more focused about its operational brilliance. Nonetheless, this shutdown of the plants will result in $49 million as hindrance charges, however the organization isn't agonized over this as the shutdown will eventually enhance its operational performance. This will prompt better revenue later on. Additionally, over the long haul, these initiatives are required to drive better sales, as it will permit Tyson to shift its creation units to better capacities.

Also, under its expansion moves, the acquisition of Hillshire is relied upon to help Tyson in extending its region of operation, adding more customers to it. Also, with such a mixture, administration thinks that Tyson will harvest benefits in terms of improvements in operations, purchasing, and distribution. Likewise, administration has also taken a strict decision to keep up a cost-productive structure to enhance its profit margins.

Past the weakness

Tyson did see some makeshift disruptions as a result of a blaze which broke out at one of its completely cooked processing plants. At the same time now, the plant is over to its operations with new supplies installed. The organization did face some unforeseen loss as a result, and is anticipating that this occasion will effect its final quarter results by a small margin. Anyhow, Tyson sees better interest for meat and pork, which will prompt an enhanced performance going ahead.

Seeing the development energy, administration has concocted a strong direction for fiscal 2015. Tyson is anticipating that general development will enhance 10%. On the revenue front, the organization is anticipating that its top line will enhance by 11%.


Taking a gander at the financials, Tyson Foods looks impressive and reasonable with an OK trailing P/E of 15.04. Administration is also anticipating that synergies will come its path with the acquisition of Tyson and Hillshire by 2015, which will help the organization develop. Investigating its earnings development for the following five years, an impressive development in Tyson's earnings by a CAGR of 19% is visible. So Tyson Foods is a decent wagered for the long run.

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