Tyson Foods Crushes Earnings: Are New 52-Week Highs Ahead?

August 06, 2024 at 07:00 AM EDT

Woodinville, WA USA - circa December 2022: Close up view of frozen chicken products for sale in the freezer section of a grocery store.

Tyson Foods Inc. (NYSE: TSN) may have picked a bad day to report good earnings. However, on a day when the market is in a full sell-off mode, TSN stock is a green shoot. In early trading, the stock is up more than 2%. That increases its 5-day increase to nearly 5% and is pushing the stock close to its 52-week high.

Heading into the earnings report, analysts predicted that Tyson would post a massive year-over-year earnings beat. The company didn’t disappoint. Earnings per share of 87 cents not only beat analysts’ expectations for 60 cents per share, but they were 480% higher than the 15 cents per share it recorded in the same quarter in 2023.

Revenue of $13.35 billion was a slight increase from the $13.21 billion analysts were forecasting. It was also higher year over year (YoY). Looking ahead, the company reiterated its full-year guidance for flat sales.

Tyson Foods: Focused on Controlling the Controllables

Tyson Foods' strategy for 2024 is “Controlling the Controllables.” One aspect of that strategy is to continue improving in its signature chicken category. The results there were mixed. Sales of chicken products were down slightly YoY, but operating income was up sharply. A good bit of that was due to lower grain prices.

By contrast, Tyson reported higher beef sales but a decline in operating income, which continues to show the challenges in this market. The sweet spot, for now, seems to be pork sales, which saw an increase in both revenue and operating income. This is also the category that is supposed to show the biggest gains in sales for the remainder of 2024.

Will the Flight to Safety Help Tyson Foods?

Over the last 10 years, the total return for TSN stock has averaged just over 10% per year. That includes a dividend that has increased for the last 13 consecutive years and has a yield of 3.13%. However, it is higher than the 8.4% sector average for consumer staples stocks in that same timeframe. Tyson stock is also up nearly double the average of the consumer staples sector in 2024.

In fairness, viewed through a longer lens, shareholders have done very well. But investors who are looking to take a position in TSN stock right now will want to know when they can expect to see growth in the company’s share price which is down 38% from its all-time high set in 2019 and again in 2021.

The key will come from earnings. Revenue is up from 2019 levels, but earnings growth has not kept pace. But that’s why another part of the company’s strategy is to manage its capital expenditures (CapEx) to drive shareholder value. In the current quarter, operational income was up 38% YoY. However, CapEx spending was down nearly 50% YoY, which is reflected in higher dividend payments and continued, albeit slower, share repurchases.

Can TSN Stock Hold These Gains?

That’s the question you have to consider before getting involved with TSN stock. The recent rally has pushed it above its 10, 50, and 200-day moving averages. However, the stock has also been oversold based on the relative strength indicator (RSI).

The key may come from any change in analyst sentiment. Heading into earnings, analysts had a consensus Hold rating on Tyson with a price target of $60. The Tyson Foods analyst forecasts on MarketBeat show no new ratings or price targets since the company reported earnings, but investors should watch that closely in the coming days.

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Tyson Foods Crushes Earnings: Are New 52-Week Highs Ahead?

Tyson Foods: Focused on Controlling the Controllables

Will the Flight to Safety Help Tyson Foods?

Can TSN Stock Hold These Gains?

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