Tyson Foods expected to report modest quarterly earnings, higher revenue

Equity analysts expect Tyson Foods to post 2% earnings growth in the first quarter of fiscal 2022, which ended Dec. 31. The Springdale-based meat company will report earnings ahead of the market opening on Monday (Feb. 7).

Consensus net income is pegged at $723 million, or adjusted earnings per share of $1.98. This compares to $707.6 million or $1.94 per share in the year-ago period.

Tyson Foods also may benefit from inflationary pricing gains pushing revenue to $11.98 billion, up 14.6% with higher meat prices across the board, according to Wall Street consensus. Overall the meat giant’s operating income is expected to total $1.064 billion for the quarter, which would be a 3.9% gain from a year ago.

Analysts with Zacks said Tyson is benefiting from its focus on protein-packed brands and capacity-expansion efforts. Tyson continues to gain from robust demand in its retail core business lines and the ongoing recovery in the foodservice sector led by quick-service restaurants is also a plus for the company, Zacks reports.

Cost inflation is a wildcard threat to earnings that Wall Street is watching closely. Analysts with Stephens Inc. have a little more bullish outlook for Tyson Foods in the quarter and beyond.

Stephens analyst Ben Bienvenu pegs quarterly earnings of $2.06 per share, which would be up 6% over a year ago. He said Tyson laid out a plan that could deliver $8 per share in baseline earnings through fiscal 2024. Bienvenu also said Tyson’s chicken segment is slowly improving and in the meantime the beef and pork segments are returning solid results.

Tyson is expected to see lower chicken operating income from a year ago at $53.9 million, down from $104 million a year ago. The margin is expected to be 1.5% in the quarter, which is still below target 5-7% margin Tyson is aiming to hit in the next year amid the segment’s ongoing recovery.

The beef segment at Tyson Foods continues to be a cash cow at a fat 16% margin expected in the recent quarter. This should push operating income to $781.5 million, up 48% from a year ago.

Tyson’s pork segment also likely fared well in the quarter with expected operating income at $148.9 million, up 28.4% with a 9% operating margin. Tyson continues to invest in this segment with a new bacon and sausage plant announced this week in Bowling, Ky., that would open in late 2023.

The prepared foods segment continues to struggle behind rising input costs and tight plant capacity. This segment is expected to see $68.5 million in operating income, down 74.3% from a year ago, with a 3% operating margin, which is well below the targeted 10-12%.

Tyson’s international business is expected to see operating income of $11.7 millions , up 6.6% from a year ago with an operating margin of 8.5% which is within the company’s target.

Bienvenu rates Tyson Foods shares (NYSE: TSN) a buy with a target price of $100. The stock closed Thursday at $90.32, down $1.05. Over the past 52 weeks, Tyson shares have traded between $63.22 and $94.09.