Opinions
Stockchase Insights
Tyson Foods Inc.
TSN-N
PARTIAL BUY
Oct 18, 2023
N/A
Stock price when the opinion was issued
food processing
It's the ideal tool to help you make quicker, more informed decisions for
managing and tracking your investments.
You might be interested:
PAST TOP PICK
(A Top Pick Jan 14/21, Up 23.3%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with TSN has achieved its $80 objective. To remain disciplined, we recommend covering 50% of the position and trailing up the stop to $75. This would all but guarantee a minimum investment return over 19%.
food processing
PAST TOP PICK
(A Top Pick Jan 14/21, Up 15.6%)Stockchase Research Editor: Michael O'Reilly Our PAST TOP PICK with TSM has triggered its stop at $75. We recommend covering any holdings at this time. Combined with our previous recommendation to cover 50% of the position, this results in a total investment return of 19%.
food processing
DON'T BUY
Produces about 20% of U.S. meat, but is slumping, down 37% from its all-time February peak when it reported a super quarter: 24% revenue growth and 48% earnings growth. But just one week after that, analysts downgraded it based on deteriorating margins, food inflation (weaker beef sales ahead), and beef and chicken gains that were already built into the stock. They still delivered a good quarter in May, but cut volume growth forecast. Summer saw shares still falling and bad headline like a price-gouging investigation by NY attorney general. Also were chicken operation problems. August quarter: Sales growth slowed, were weaker margins and cut their full-year guidance to zero growth. September: new CFO who was soon arrested for public intoxication. More problems. Last month's quarter came in mixed, including missed EPS. Inflation and a weaker economy means consumers will trade down and not buy high-end meat, which will hit Tyson.
food processing
Advertising
TSN pays a good yield of 4%, and management has grown its dividends nicely over the past 10 years. Sales growth is expected to be modest in the next few years (low single digits), and it generates a good level of operating cash flows. Its margins have contracted over the past 12 months, and it has missed on its five past earnings results. Its balance sheet is strong, with a good cash balance of $706M and an equity position of $18.9B. It has its strengths and operates in a defensive sector. We would be comfortable with this name for income, but we do not expect much in the way of growth in the near to intermediate term.
Unlock Premium - Try 5i Free