Meat producer Tyson Foods (NYSE:TSN) delivered a solid earnings report that beat expectations with both earnings and revenue. This prompted an increase of 1% in Tyson stock price in premarket trading today. Trading volume is running about 50% over normal, and a new 52-week high is a potential reality, as sales growth in all segments experiences elevated conditions. However, Tyson did note some potential issues that may hurt progress going forward.
A Thoroughly Appetizing Tyson Earnings Report
The earnings report Tyson Foods presented delivered excellent results for its second quarter of fiscal year 2021. Adjusted earnings per share came in at $1.34, which not only beat both the FactSet consensus of $1.15 and the Zacks consensus of $1.11, but also handily beat the year prior, which came in at $0.80.
Revenue delivered similar results; the company brought in $11.3 billion in sales, which beat the FactSet consensus of $11.19 billion, the Zacks consensus of $11.204 billion, and the year-ago figures of $10.89 billion.
Tyson delivered growth on nearly every front in which it worked, with its beef sales up from $3.979 billion a year ago to $4.046 billion this year. While volume declined as the result of severe winter weather in Texas, and already-appearing difficulties in the labor market, average sales prices were up as beef demand continued to increase regardless. Pork sales also increased from $1.266 billion to $1.477 billion, and chicken—perhaps Tyson's flagship product—was up from $3.397 billion to $3.553 billion this year.
However, Tyson—via chief executive Dean Banks—warned that “substantial inflation across our supply chain” was likely to lead to pressure on margins in the second half this year. The company already spent $95 million on expenses directly connected to Covid-19, and with lawsuits and firings weighing on the system, that could further hurt Tyson's progress going forward.
What are Financial Analysts Saying About TSN Stock?
Tyson stock is up 22.3% so far this year, and financial analysts are maintaining a cautious outlook. Until March 2021, the company had enjoyed a consensus rating of “buy”, but the shift to “hold” is a comparatively recent development.
A year ago, the company had seven “buy” ratings, five “hold” and one “sell” to its credit. A shift toward bearishness began back in August, when the ratings picture shifted to six “buy” and six “hold”, though the “sell” rating had also left. The shift continued in February, though, as the company went to five “buy” and six “hold”. Today, the ratios stand at three “buy” and four “hold”, which maintains the “hold” consensus.
The consensus price target of $77.60, however, remains in a fairly narrow range. With a current high target of $90 and a current low of $68, it's clear not much movement is expected for Tyson. Tyson's share price is nearly a match for consensus as of this writing, coming in at $77.04, but a new 52-week high is just $2.74 away.
Recent movement in any direction for Tyson hasn't appeared, either; the last adjustment in any direction came from Stephens, which adjusted its price target upward on April 15 and also established the new high of $90. Before that, the last adjustment appeared in mid-December, as JPMorgan Chase & Co. downgraded Tyson from “overweight” to “neutral” and lowered the price target from $72 to its current $70. That came on the heels of the opposite move at Piper Sandler, as it upgraded from “neutral” to “overweight” and raised the price target from $70 to $77.
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