Tyson Foods is expected to earn $2.03 per share, or $749 million, for the period ending Sept 30. The estimate would be a net income gain of roughly 8.3% for the year-over-year period. The company reports quarterly earnings Nov. 15.
For fiscal 2021 earnings, equity analysts predict Tyson will post earnings per share of $7.91, up 36.8% from the prior fiscal year. On an adjusted basis, Wall Street expects Tyson’s EBITDA (earnings before interest, taxes, depreciation and amortization) for the year of $5.2 billion, up roughly 20% from the prior year.
Revenue for the fourth quarter is pegged at $12.56 billion, up 9.8% from a year ago. Full-year revenue is forecast at $46.7 billion, up 8.6% from the $43 billion reported a year ago.
Tyson is expected to have benefited from record high beef packing margins averaging more than $920 per head slaughtered during the quarter, according to Hedgers Edge. Beef production was lower in the quarter from a year ago with slaughter numbers flat and plants still struggling to get workers back. Live cattle prices were elevated in the quarter and retail beef prices also rallied to just under $8 per pound for choice cuts. Analysts said Tyson’s beef segment remains profitable despite labor issues in certain plants.
To help combat worker issues in Tyson’s largest beef packing plant, the company recently announced it would offer access to childcare for second shift workers at the Amarillo, Texas, beef packing plant. Tyson Foods said through a recent survey it had identified affordable childcare as one of the employee challenges. The company says the new program will offer free tuition to children of its second shift workers through two local service providers.
Tyson is expected to post muted gains in the pork segment as packing margins were 15% lower during the fourth quarter compared to a year ago. Slaughter was down as was overall domestic and global demand. Retail prices for pork rose sharply to finish out the quarter at $4.70 per pound, up 20% from the year-ago period.
The wildcard for Tyson’s earnings continues to be the company’s chicken segment that made strides toward higher margins in the past two quarters. Packer margins were more than double that of a year ago with slaughter up as was overall production for the chicken industry throughout the summer months. Another bright spot was record low cold storage levels which helped to bolster chicken prices higher during the summer before recently falling back.
Grain costs for corn and soybean meal, the two main ingredients for feeding chickens, are also elevated from a year ago. Corn ranged between $5.90 and $4.90 a bushel in the quarter, up $3.00 a bushel last year. Soybean meal prices are up 23% in the year-over-year period. Tyson executives said in the last quarter that chicken is a top priority and the company is on track to get operating margins to the 5% to 7% range by mid next year.
Ben Bienvenu, an analyst at Stephens Inc., said recently much of what he likes about Tyson Foods’ story is in what’s to come. He is looking for steady improvements in chicken margins and stronger operational execution across the enterprise under the leadership of CEO Donnie King. He said Tyson maintains a strong balance sheet and the rewards outweigh the risks. Stephens rates Tyson Foods a “buy” with a price target of $90.
Analysts with Zacks recently upgraded Tyson Foods to a “buy” rating. The analyst group said Tyson Foods is a “solid bet.” They pointed to growth in the retail channel as well as the recovery of food service as two reasons Tyson will overshoot expectations on Monday. The company’s focus on enhancing operational efficiencies has also been yielding favorably,” the analysts noted.
Shares of Tyson Foods (NYSE: TSN) closed Wednesday at $82.54, up $1.02 on the day when the Dow Industrials were down as were the other major indexes. The main reason for the bearish day were inflationary fears as consumer prices rose more than 6% in October. Tyson and other food companies are poised to benefit from inflationary prices. As of Wednesday, Tyson shares are up 28% year-to-date with a 52-week low of $60.10 with a high of $83.76.