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Tyson Foods (TSN) Q4 Earnings Beat Estimates, Sales Dip Y/Y

Tyson Foods, Inc. TSN posted mixed results for fourth-quarter fiscal 2023, with the top line lagging the Zacks Consensus Estimate, while the bottom line beat the same. Earnings and sales declined year over year on tough market dynamics.

The company has posted adjusted earnings of 37 cents per share, beating the Zacks Consensus Estimate of earnings of 33 cents per share. The bottom line significantly declined from earnings of $1.63 per share reported in the year-ago period.

Quarter in Detail

Total sales were $13,348 million, down 2.8% from the year-ago quarter figure. The top line lagged the Zacks Consensus Estimate of $13,706 million. Average price changes had a 1.4% adverse impact on the top line, while total volumes dipped 0.6%.

Tyson Foods, Inc. Price, Consensus and EPS Surprise

 

Tyson Foods, Inc. Price, Consensus and EPS Surprise
Tyson Foods, Inc. Price, Consensus and EPS Surprise

Tyson Foods, Inc. price-consensus-eps-surprise-chart | Tyson Foods, Inc. Quote

The gross profit in the quarter was $459 million, down from the $1,307 million reported in the prior-year quarter. As a percentage of sales, the gross profit was 3.4%, down from the 9.5% reported in the year-ago quarter.

Tyson Foods’ adjusted operating income plunged 71.3% to $236 million. The adjusted operating margin contracted to 1.8% from the 6% reported in the year-ago quarter.

Segmental Details

Beef: Sales in the segment declined to $5,029 million from the $4,859 million reported in the year-ago quarter. Volumes dropped 6.7% and the average price increased 10.2% in the segment.

Pork: Sales in the segment fell to $1,494 million from the $1,604 million reported in the year-ago quarter. Volumes dipped 0.2%, while the average price tumbled 6.7%.

Chicken: Sales in the segment decreased to $4,155 million from the $4,619 million reported in the year-ago quarter. Sales volumes rose 1.7% and the average price decreased 9.2%.

Prepared Foods: Sales in the segment fell to $2,502 million from the $2,516 million reported in the year-ago quarter. Prepared Foods’ sales volumes inched up 1% and the average price decreased 1.6%.

International/Other: Sales in the segment were $636 million, down from the $638 million reported in the year-ago quarter. Volumes jumped 4.9% and the average sales price fell 5.2%.

Other Financial Updates

The Zacks Rank #3 (Hold) company exited the quarter with cash and cash equivalents of $573 million, long-term debt of $7,611 million and total shareholders’ equity (including non-controlling interests) of $18,255 million. For the fiscal year, cash provided by operating activities amounted to $1,752 million.

Liquidity was about $3 billion as of Sep 30, 2023. Management expects liquidity to exceed the company’s minimum target of $1 billion.

Effective Nov 10, 2023, the company’s board increased the quarterly dividend earlier declared on Aug 10, 2023,to $0.49 per share on its Class A common stock and $0.441 per share on its Class B common stock. This dividend is payable on Dec 15, 2023, to shareholders of record as of Dec 1, 2023. The company’s board also declared a quarterly dividend of $0.49 per share on its Class A common stock and $0.441 per share on its Class B common stock, payable on Mar 15, 2024, to shareholders of record as of March 1.  Management expects the balance quarterly dividends in fiscal 2024 to be $0.49 and $0.441 per share of its Class A and Class B common stock, respectively.

Tyson Foods projects capital expenditure to be nearly $1-$1.5 billion for fiscal 2024. These include expenditures related to capacity expansion, automation, and product and brand innovation.

Guidance

For fiscal 2024, the United States Department of Agriculture (“USDA”) projects domestic protein production for beef to decline 5% versus fiscal 2023. For pork, USDA projects domestic production to jump 2% from fiscal 2023. For chicken, USDA expects projects domestic protein production to rise slightly from fiscal 2023.

Management anticipates improved results from the company’s foreign operations during fiscal 2024. Revenues are projected to be relatively flat in fiscal 2024 versus fiscal 2023. It forecasts adjusted operating income to be $1-$1.5 billion for fiscal 2024.

Net interest expenses are expected to be $400 million. The adjusted tax rate is likely to be nearly 23% in fiscal 2023.

TSN’s shares have lost 13.8% in the past three months compared with the industry’s 15.7% decline. The company currently carries a Zacks Rank #4 (Sell).

Stocks to Consider

Inter Parfums IPAR, which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales indicates 19.7% growth from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 45.9% on average.

Helen of Troy HELE, a provider of several consumer products, currently has a Zacks Rank #2 (Buy). HELE’s expected earnings per share growth rate for three to five years is 8%.

The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales suggests a decline of 2.9% from the year-ago reported numbers. HELE has a trailing four-quarter earnings surprise of 8.1%, on average.

Ingredion Incorporated INGR, a producer and distributor of sweeteners, nutrition ingredients and biomaterial solutions, currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for INGR’s current financial-year earnings per share is expected to rise 23.9% from the corresponding year-ago reported figure.

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