Tyson Foods: Still A Good Meal For Your Portfolio

Core Viewpoint - Tyson Foods is facing challenges in its beef segment, which is experiencing margin compression despite rising prices and volumes, while other segments like chicken and pork are performing better, leading to an overall improvement in the company's financial performance [3][8][20]. Financial Performance - In the third quarter of fiscal year 2024, Tyson Foods reported revenue of $13.35 billion, a 1.6% increase from $13.14 billion in the same quarter last year [4]. - The company generated a net profit of $191 million in the most recent quarter, a significant improvement from a loss of $417 million reported a year earlier [18]. - Operating cash flow increased by 20.6% from $660 million to $796 million, and EBITDA rose from $466 million to $823 million [18]. Segment Analysis Beef Segment - The beef segment generated $5.24 billion in sales for the third quarter, up 5.8% from $4.96 billion a year earlier, driven by a 4.4% increase in volume and a 1.4% rise in average sales price [6][7]. - For the first nine months of 2024, beef revenue was $15.22 billion, a 6.4% increase from $14.30 billion in the same period last year, with volume growth of only 0.9% and average sales prices up 5.5% [7]. - The segment reported a loss of $69 million in the most recent quarter, compared to a profit of $66 million a year earlier, and a loss of $310 million for the first nine months compared to a profit of $232 million in 2023, primarily due to margin compression [8]. Chicken Segment - The chicken segment generated $4.08 billion in sales for the third quarter, down from $4.21 billion a year earlier, but profits improved to $244 million from a loss of $314 million [12]. - For the first nine months, chicken revenue was $12.17 billion, down from $12.91 billion, but profits increased significantly due to a reduction in feed ingredient costs [12]. Pork Segment - The pork segment saw sales rise to $1.46 billion in the most recent quarter, up from $1.32 billion a year earlier, and $4.47 billion for the first nine months, compared to $4.27 billion last year [14]. - Operating losses in the pork segment narrowed compared to the previous year, benefiting from improvements in live hog operations [14]. Prepared Foods Segment - The prepared foods segment reported modest sales growth, with third-quarter sales of $2.43 billion, up from $2.38 billion a year earlier, but operating income declined slightly [17]. Market Positioning - Tyson Foods is currently valued attractively compared to peers, with a price to operating cash flow ratio of 11.1 and an EV to EBITDA ratio of 10.2, making it one of the cheaper options in the food industry [19][20]. - The company is expected to benefit from the rising consumption of chicken, which has increased from 28 lbs per capita in 1960 to an estimated 103.2 lbs in 2023, with projections for further growth [20][21].