Tyson Foods Inc. TSN shares continue to slide lower on Tuesday. This comes after yesterday's decline of more than 7%. Earnings came in at 92 cents, which was slightly ahead of estimates. But the $13.07 billion of revenue was lower than the $13.14 billion analysts were looking for.Despite today's move, there is a good chance that it could reverse and head higher. This is why we have made it our Stock of the Day.Sometimes, technical market dynamics can be more important than the fundamental news that has been ...

Core Viewpoint - Tyson Foods' stock price experienced a decline of over 7% following the Q2 earnings release and guidance update, which presents a potential investment opportunity as the market reaction appears to be an overreaction to solid guidance reaffirmed at previous levels [1][2]. Financial Performance - Q2 revenue for Tyson Foods was reported at $13.07 billion, remaining relatively flat compared to the previous year, with pricing increases compensating for volume weaknesses in several areas [4]. - Adjusted operating margin improved by 70 basis points, leading to a significant 48% increase in adjusted earnings, which outperformed consensus estimates by 1000 basis points [6]. Dividend and Capital Return - The dividend yield stands at 3.59%, with a payout of $2.00, supported by a sustainable payout ratio, cash flow, and earnings growth outlook [2][3]. - The company has a history of increasing its dividend for over a dozen years, indicating a positive trend in capital return [3]. Debt Management - Tyson Foods has been actively reducing its debt, with a reduction of nearly $0.75 billion in Q2, resulting in a year-to-date decrease of 15% [8]. - The debt-to-equity ratio is below 0.5x, positioning the company favorably against long-term targets [8]. Stock Forecast - The 12-month stock price forecast for Tyson Foods is $61.78, indicating an 11.20% upside potential from the current price of $55.56 [5]. - Analysts predict growth in three segments for Q3, with expectations for sustained growth in the long term [5]. Market Sentiment - Following the Q2 release, Tyson's stock price fell to the low end of the analyst's target range but is expected to rebound towards the higher end by year-end [9]. - The stock is currently rated as a Hold, with sentiment trends showing potential upgrades and a firm consensus target of $61.75 [9].

Tyson Foods reported lower-than-expected quarterly sales and stuck to its annual revenue forecast on Monday amid weaker demand for beef, sending shares down 9% and overshadowing better-than-anticipated profits.President Trump’s trade policies hung over the meat company due to concerns that tariff disputes could raise prices for a range of consumer goods and further reduce demand for pricey meat products.Beef prices have already climbed after US ranchers slashed their cattle herds due to a years-long drought ...

Core Insights - Tyson Foods, Inc. (TSN) reported a strong increase in adjusted earnings per share, reaching 92 cents, which exceeded the Zacks Consensus Estimate of 85 cents and marked a 48% increase from the previous year's 62 cents [2] - Total sales remained flat at $13,074 million year over year, missing the Zacks Consensus Estimate of $13,097.8 million, with average price changes positively impacting the top line by 2.6% while total volumes remained unchanged [2] Financial Performance - Gross profit for the quarter was $600 million, down from $866 million in the same period last year [3] - Adjusted operating income increased by 27% to $515 million from $406 million year over year, with the adjusted operating margin expanding to 3.8% from 3.1% [3] Segment Performance - **Beef**: Sales increased to $5,196 million from $4,954 million, with volumes down 1.4% and average prices up 8.2% [4] - **Pork**: Sales decreased to $1,244 million from $1,486 million, with volumes down 3.8% and average prices up 4.3% [4] - **Chicken**: Sales improved to $4,141 million from $4,065 million, with sales volumes growing 3% and average prices down 1.1% [5] - **Prepared Foods**: Sales were $2,396 million, down from $2,404 million, with volumes dipping 2.6% and average prices rising 2.3% [5] - **International/Other**: Sales were $566 million compared to $580 million, with volumes down 1.5% and average sales prices down 0.9% [6] Financial Position - The company ended the quarter with cash and cash equivalents of $992 million, long-term debt of $8,172 million, and total shareholders' equity of $18,531 million [7] - Liquidity stood at $3.2 billion, expected to remain above the minimum target of $1 billion for fiscal 2025, with projected capital expenditure of $1-$1.2 billion [8] Future Outlook - The USDA projects a 1% increase in domestic protein production for fiscal 2025 compared to fiscal 2024 [10] - For fiscal 2025, Tyson Foods anticipates total revenue growth to be flat to a 1% increase, with adjusted operating income expected in the range of $1.9-$2.3 billion [12] - Segment-wise, adjusted operating income projections include a loss of $0.4-$0.2 billion for Beef, and profits of $0.1-$0.2 billion for Pork, $1-$1.3 billion for Chicken, and $0.9-$1.1 billion for Prepared Foods [13]

Core Insights - Tyson Foods Inc (NYSE:TSN) experienced a 9.5% decline in stock price, trading at $54.99, despite reporting better-than-expected fiscal second-quarter earnings driven by strong chicken sales, although profits decreased year-over-year [1] - The company is facing its worst daily percentage drop since May 2023, with stock prices at their lowest since January 2023, and trading below all short- and long-term trendlines [2] - Analysts have not yet provided commentary on the results, but the majority hold a "hold" rating, with a consensus 12-month price target of $66.49, which is significantly above current trading levels [3] Financial Performance - Fiscal second-quarter earnings exceeded expectations, primarily due to robust chicken sales, but overall revenue fell short of estimates [1] - Profits for the quarter decreased compared to the same period last year [1] Market Activity - The stock is currently below all moving averages from 20 to 320 days, indicating a bearish trend [2] - Options trading shows a significant increase in activity, with 2,418 calls and 6,454 puts traded, which is 3.6 times the average daily options volume [2] Analyst Ratings - Seven analysts currently cover Tyson Foods, with a majority rating the stock as "hold" and only two providing a "buy" rating [3] - The consensus price target of $66.49 suggests a premium compared to the current stock price [3]

Core Insights - Tyson Foods reported $13.07 billion in revenue for the quarter ended March 2025, showing a year-over-year increase of 0% and an EPS of $0.92 compared to $0.62 a year ago, with a revenue surprise of -0.18% and an EPS surprise of +8.24% [1] Financial Performance - Revenue of $13.07 billion compared to Zacks Consensus Estimate of $13.1 billion [1] - EPS of $0.92 compared to consensus estimate of $0.85 [1] - Year-over-year revenue growth of 0% [1] Key Metrics - Beef volume decreased by 1.4% compared to the average estimate of -1.5% [4] - Chicken volume increased by 3% compared to the average estimate of 1% [4] - Sales for Chicken were $4.14 billion, exceeding the average estimate of $4.05 billion, with a year-over-year change of +1.9% [4] - Sales for Beef were $5.20 billion, surpassing the average estimate of $4.97 billion, with a year-over-year change of +4.9% [4] - International/Other sales were $566 million, below the estimated $582.90 million, representing a -2.4% change year-over-year [4] - Prepared Foods sales were $2.40 billion, slightly below the estimated $2.46 billion, with a -0.3% change year-over-year [4] - Pork sales were $1.24 billion, below the average estimate of $1.47 billion, reflecting a -16.3% year-over-year change [4] Operating Income - Adjusted Operating Loss for Beef was -$149 million compared to the average estimate of -$122.63 million [4] - Adjusted Operating Income for Pork was $55 million, exceeding the average estimate of $40.74 million [4] - Adjusted Operating Income for International/Other was $53 million, surpassing the average estimate of $14.62 million [4] - Adjusted Operating Income for Prepared Foods was $244 million, slightly below the average estimate of $255.29 million [4] Stock Performance - Tyson shares returned +1.6% over the past month, outperforming the Zacks S&P 500 composite's +0.4% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market [3]

Group 1 - Tyson Foods reported a profit exceeding market expectations due to increased chicken sales offsetting losses in the beef segment [1] - For Q2 of fiscal year 2025, Tyson's revenue was $13.07 billion, flat year-over-year and below market expectations; earnings per share reached $0.92, a 48% increase from the previous year, surpassing analysts' average forecast of $0.80 [1] - Adjusted operating profit grew nearly 27% year-over-year to $515 million, primarily driven by chicken sales growth [1] Group 2 - Tyson's beef segment reported a loss of $149 million (excluding special items), marking the sixth consecutive quarter of losses for this segment due to rising cattle costs that could not be passed on to consumers [2] - The adjusted operating profit for the chicken segment was $312 million, outperforming analyst expectations [2] - The average loss per cattle for beef packers reached $115.97, the highest since at least 2014 [2] Group 3 - The free cash flow generated in the first six months of fiscal year 2025 was lower than the same period last year [3]

Financial Data and Key Metrics Changes - Second quarter adjusted operating income increased by more than $100 million or 27% year-over-year, with a margin expansion of 70 basis points [9][23] - Adjusted earnings per share grew by 48%, reflecting improved operating performance and strategic execution [9][23] - Enterprise sales for the second quarter were $13.1 billion, which included a reduction of $343 million or 2.6% related to a legal contingency accrual primarily in pork [23][24] Business Line Data and Key Metrics Changes - **Prepared Foods**: Sales were in line with last year, with adjusted operating income increasing nearly 5% and margin improving by 50 basis points [24][25] - **Chicken**: Achieved the best second quarter adjusted operating income in nine years, with a nearly 95% increase compared to the same quarter last year [16][26] - **Beef**: Sales increased primarily due to a higher average price per pound, but adjusted operating income declined due to spread compression [27] - **Pork**: Adjusted operating income increased by 67%, reflecting the strongest second quarter result in the past three years [18][28] Market Data and Key Metrics Changes - 71% of U.S. consumers sought to increase their protein consumption in 2024, indicating robust demand for meat products [10][11] - U.S. meat sales at retail hit an all-time high in 2024, with meat included in nearly 90% of home-cooked dinners [11] Company Strategy and Development Direction - The company is focused on operational excellence, customer and consumer obsession, and capital allocation to drive long-term value [19][32] - A multi-year plan is in place to optimize operations, launch innovations, and expand distribution, particularly in the Prepared Foods segment [13][19] - The company is transitioning to a new logistics and distribution infrastructure, which is expected to generate around $200 million in annual savings upon completion [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic macro environment, emphasizing the importance of their multi-protein, multi-channel portfolio [9][44] - The company anticipates sales growth to be flat to up 1% year-over-year, with adjusted operating income expected between $1.9 billion and $2.3 billion [30][32] - Management acknowledged challenges in the beef segment but remains optimistic about the overall business performance [44][106] Other Important Information - The company is committed to eliminating petroleum-based synthetic dyes from its products, with completion expected by May [21][22] - A new Chief Growth Officer, Christina Lambert, has been appointed to lead strategic initiatives [33][34] Q&A Session Summary Question: Why did the company not raise guidance for the full year despite beating consensus expectations? - Management indicated that while results were strong, they are cautious due to uncertainties in the beef market and consumer pressures, reaffirming guidance for the year [41][46] Question: What is the outlook for chicken demand? - Management remains optimistic about chicken demand, citing strong performance and a commitment to maintaining market share, despite some uncertainties in the industry [49][51] Question: Can you elaborate on the changes in cold storage facilities and expected savings? - Management explained that the transition to new cold storage facilities is aimed at reducing costs and improving efficiency, with expected annual savings of $200 million [56][62] Question: What are the expectations for the international business? - Management highlighted improved operational fundamentals and execution of a commercial growth strategy, leading to strong performance in the international segment [95][96] Question: How does the company view the impact of tariffs on trade flows? - Management does not expect global protein consumption to change significantly but anticipates temporary disruptions as trade flows adjust [121]

Supplemental Information Q2 Fiscal 2025 May 5, 2025 Forward-Looking Statements Certain information in this presentation constitutes forward-looking statements as contemplated by the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, current views and estimates of our outlook for fiscal 2025, other future economic circumstances, industry conditions in domestic and international markets, our performance and financial results (e.g., debt levels, r ...

Financial Performance - Sales increased by 1.2%, or $306 million, in the first six months of fiscal 2025, driven by higher sales in the Beef and Chicken segments, despite a 2.6% decline in the second quarter due to $343 million in legal contingency accruals[133] - Operating income for the second quarter of fiscal 2025 was $100 million, down 68% compared to the same period in fiscal 2024, primarily due to lower income in the Beef and Pork segments[133] - Operating income for the first six months of fiscal 2025 was $680 million, up 25% compared to the first six months of fiscal 2024, supported by higher income in the Chicken segment[135] - Net income attributable to Tyson for the second quarter of fiscal 2025 was $7 million, down from $145 million in the same period of fiscal 2024, resulting in a diluted earnings per share of $0.02 compared to $0.41[161] - Total sales for the second quarter of fiscal 2025 were $13.074 billion, slightly up from $13.072 billion in the second quarter of fiscal 2024, with total sales for the first six months reaching $26.697 billion, compared to $26.391 billion in the prior year[163] Segment Performance - The Beef segment reported sales of $5.196 billion for the second quarter of fiscal 2025, an increase of 4.9% from $4.954 billion in the same quarter of fiscal 2024, while the operating loss for this segment was $258 million[170] - The Pork segment experienced a sales decline of 16.3% to $1.244 billion in the second quarter of fiscal 2025, with an operating loss of $195 million, compared to a loss of $1 million in the same period of fiscal 2024[172] - The Chicken segment's sales increased by 1.9% to $4.141 billion in the second quarter of fiscal 2025, with operating income rising to $262 million from $158 million in the same quarter of fiscal 2024[175] - Prepared Foods segment sales decreased slightly to $2.396 billion in the second quarter of fiscal 2025, down from $2.404 billion in the same period of fiscal 2024, with operating income increasing to $244 million[177] Cost and Expenses - Cost of sales increased by $268 million in the second quarter of fiscal 2025, driven by higher input costs, particularly an increase of approximately $470 million in cattle costs in the Beef segment[146] - Selling, general and administrative expenses decreased by $131 million in the second quarter of fiscal 2025, primarily due to lower marketing and employee costs[149] - The company recognized $343 million pretax related to legal contingency accruals in the second quarter of fiscal 2025, impacting net income significantly[164] Cash Flow and Liquidity - Cash provided by operating activities for the first six months of fiscal 2025 was $846 million, a decrease of $331 million compared to the first six months of fiscal 2024[184] - Net cash used for investing activities was $414 million for the first six months of fiscal 2025, compared to $621 million in the same period of fiscal 2024[187] - At March 29, 2025, total liquidity was $3.242 billion, including cash and cash equivalents of $992 million and a revolving credit facility of $2.25 billion[189] - The company intends to pay current debt of $896 million with existing cash balance and cash generated from operating activities[192] Debt and Interest - The current ratio was 1.7 to 1 at March 29, 2025, down from 2.0 to 1 at September 28, 2024, primarily due to decreased cash and increased current debt[201] - The company had variable rate debt of $781 million with a weighted average interest rate of 6.2% as of March 29, 2025, and a hypothetical 10% increase in interest rates would raise annualized interest expense by approximately $5 million[216] - The company reported fixed-rate debt of $8,287 million with a weighted average interest rate of 4.8% as of March 29, 2025, and a hypothetical 10% decrease in interest rates would increase the fair value of this debt by approximately $240 million[217] - The company is required to maintain a minimum interest expense coverage ratio as part of its debt covenants[204] - The company is in compliance with all debt covenants as of March 29, 2025, and expects to maintain compliance[204] Market and Economic Conditions - The company plans to continue analyzing the impact of supply chain and tariff changes on pricing and demand for its products in the coming months[137] - The company continuously evaluates macro-economic conditions, including inflationary pressures and rising interest rates, which could impact its operations and financial results[208] - The company has foreign exchange exposure primarily from receivable and payable balances in currencies such as the Brazilian real and the British pound, with a hypothetical 10% change in foreign exchange rates impacting pretax income by $24 million as of March 29, 2025[219] Operational Initiatives - The company initiated a network optimization plan, incurring $43 million in charges in the second quarter and $116 million in the first six months of fiscal 2025, aimed at optimizing global operations[140] - The Beef segment faced limited supply of market-ready cattle and increased costs, while the Chicken segment benefited from reduced feed ingredient costs[136] - The company uses derivative financial instruments to manage commodity price risks, with sensitivity analyses indicating potential changes in fair value due to market price fluctuations[214]