Analysts expect lower first quarter net income for Tyson Foods

Tyson Foods has had its challenges in 2020 and that reality will continue in the short term. The Springdale-based company is expected to post an 8% net income decline in fiscal 2021 first quarter, which ended in December.

Wall Street expects the meat giant to report net earnings of $1.52 per share, down from $1.66 reported a year ago. Revenue is pegged at $10.82 billion, up slightly from the $10.81 billion reported last year. Tyson will report fiscal first quarter earnings ahead of the market opening on Thursday (Feb. 11).

Stephens Inc. on Monday, raised its expectations for Tyson Foods and its competitors Pilgrim’s Pride and Sanderson Farms based on improving chicken demand supported by higher chicken prices as rising grain expenditures are likely to curb chicken production. (Stephens Inc. does investment banking work for Tyson Foods and is compensated accordingly.)

Ben Bienvenu, an analyst with Stephens, upgraded Tyson Foods to overweight with a price target of $80. He said after years of under-earning the poultry group is poised to show an improvement this year.

He said the chicken cutout margins – the sum of all the parts – will be high enough to cover rising feed costs which should benefit Tyson Foods. The improvement in chicken was enough to raise Stephens’ fiscal 2021 earnings estimate for Tyson Foods to $5.96 per share, up from $5.52. Bienvenu said the risks to that forecast include greater than expected declines in beef packing margins, operations execution, the pace of demand recovery and uncertainty around COVID costs and continued volatility in commodity pricing.

Tyson is expected to report operating income of $881.4 million in the quarter, down from $894 million a year ago. The chicken segment is expected to post operating income of $68.4 million, down compared with $78 million a year ago. The pork segment is poised to see operating income of $130.3 million, down from $193 million in the year-ago period.

The beef segment is expected to see higher operating income at $449 million, up from $431 a year ago. The biggest improvements are expected for the prepared foods segment with operating income hitting $243 million, up from $180 million in the same quarter last year. The international segment is expected to report an operating loss of roughly $10 million, reversing the gain of $12 million a year ago.