Tyson Foods tops revenue estimates on strong consumer demand for protein

© Reuters.

By Sam Boughedda

Tyson Foods (NYSE:TSN) reported its fiscal fourth-quarter earnings results before the open on Monday, missing profit estimates but topping analyst expectations for revenue.

The company's shares are currently down over 1% at the time of writing, despite rising earlier in the session.

The Springdale, Arkansas-based company reported earnings of $1.63 per share, $0.07 worse than the analyst estimate of $1.70, with revenue coming in at $13.74 billion versus the consensus estimate of $13.47B.

The company's President and CEO, Donnie King, told investors they "delivered record sales and earnings for the full year," supported by its "diverse portfolio and continued strength in consumer demand for protein."

He added that the results were supported by historically strong operations in the company's beef segment and improved performance in its chicken segment.

The company stated that its average beef sales price increased in fiscal 2022 as input costs such as live cattle, labor, freight, and transportation costs increased, and demand for its beef products remained strong in the first half of the fiscal year. Meanwhile, its chicken sales volume increased mainly due to improved domestic production.

Looking ahead, Tyson Foods sees FY 2023 revenue between $55B and $57B, above the consensus of $53.6B.

Reacting to its earnings release, Goldman Sachs analysts, who maintained a Buy rating and $97 per share price target on the stock, said overall, they see scope for a muted share reaction today, with both bulls and bears likely finding different elements of the results and outlook supportive of their views.

"On the positive side, Chicken margin performance in the quarter surprised positively and overall FY23 outlook commentary would appear, at least at first glance, to be broadly consistent with EPS in the range of $7, a level notably above the view of a number of investors we have recently spoken with have expected. On the negative side, the quarter was modestly below consensus, including underwhelming margins in more value-added Prepared Foods, while Beef margins are correcting rapidly amidst a declining cattle herd, and Capex at $2.5bn is set to remain elevated and could signal less scope for cash return to shareholders," added the analysts.