Credit Agricole Downgrades Tyson Foods to ‘Outperform’

Yesterday’s Consumer Pops and Drops: TSN, MO, DLPH, and KATE

(Continued from Prior Part)

Price movement of Tyson Foods

Tyson Foods (TSN) has a market cap of $23.3 billion. TSN fell by 4.0% to close at $65.63 per share as of April 13, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -3.5%, -2.4%, and 23.3%, respectively, on April 13. This means that TSN is trading 2.7% below its 20-day moving average, 1.9% above its 50-day moving average, and 29.8% above its 200-day moving average.

The iShares Morningstar Mid-Cap Value ETF (JKI) invests 1.2% of its holdings in Tyson Foods. The ETF selects from the 70%-90% range of the US market capitalization, sorting value stocks based on ten factors. The YTD price movement of JKI was 4.5% as of April 12, 2016.

The market caps of Tyson Foods’ competitors are as follows:

• Hormel Foods (HRL): $21.3 billion

• Pilgrim’s Pride (PPC): $6.7 billion

• Sanderson Farms (SAFM): $2.1 billion

Credit Agricole downgraded Tyson Foods

Credit Agricole has downgraded Tyson Foods’ rating to “outperform” from “buy.”

Performance of Tyson Foods in fiscal 1Q16

Tyson Foods reported fiscal 1Q16 sales of $9,152.0 million, a fall of 15.4% compared to sales of $10,817.0 million in fiscal 1Q15. Sales of chicken, beef, pork, and prepared foods fell by 5.2%, 17.7%, 21.2%, and 11.1%, respectively, in fiscal 1Q16 compared to sales in fiscal 1Q15. The company’s cost of sales as a percentage of sales fell by 4.4%, and its operating income rose by 52.5% in fiscal 1Q16 compared to fiscal 1Q15.

Its net income, EPS (earnings per share), EPS class A, and EPS class B rose to $461.0 million, $1.15, $1.18, and $1.09, respectively, in fiscal 1Q16, compared to $309.0 million, $0.74, $0.77, and $0.71, respectively, in fiscal 1Q15. It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $947.0 million in fiscal 1Q16, a rise of 28.7% compared to fiscal 1Q15.

Tyson Foods’ cash and cash equivalents rose by 72.5%, and its inventories fell by 2.1% in fiscal 1Q16 compared to fiscal 4Q15. Its current ratio rose to 1.55x, and its long-term debt-to-equity ratio fell to 0.61x in fiscal 1Q16, compared to a current ratio and long-term debt-to-equity ratio of 1.52x and 0.62x, respectively.

Projections

The company has made the following projections for fiscal 2016:

• sales of ~$37 billion

• capital expenditures of ~$900 million

Now let’s take a look at Altria Group.

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Who Were the Outliers in the Consumer Space on April 13?

• Part 3 - Why Altria Group Fell by ~3% on April 13

• Part 4 - Delphi Automotive Rose by ~5% on April 13