Tyson Foods Inc. has encountered recent challenges in its beef, chicken, and pork segments, which industry experts believe are transient hurdles rather than enduring issues, following an analysis of the company’s third-quarter results.
In the assessment provided by Ben Bienvenu of Stephens Inc., the decision made by Tyson to close four underperforming chicken plants beginning in October is viewed positively, despite the notable impairment it entails. The decline in sales and volume across the beef, pork, and prepared foods segments is attributed to cyclical factors that have momentarily impacted Tyson’s overall earnings potential, according to Bienvenu’s report.
Bienvenu remains optimistic about the gradual improvement of Tyson’s chicken business over time. Nonetheless, he has adjusted his predictions for adjusted earnings in 2023, revising the figure from $1.40 to $1.21 per share. Similarly, his projection for 2024 has been revised from $4.46 per share to $3.00 due to the insights gained from the Q3 results.
Concurrently, Ken Goldman, an analyst at J.P. Morgan, has identified promising signs of recovery within Tyson’s chicken business, with expectations for continued enhancement. Nevertheless, challenges persist within the beef sector and a potential turnaround for pork, which lead Goldman’s team to adopt a cautious stance. Consequently, he has adjusted the projected adjusted earnings for fiscal 2023 from $1.53 to $1.30 per share. For the year 2024, his revised estimate is $2.90 per share, compared to the earlier estimate of $1.83.
Goldman also pointed out that Tyson’s strategy to redistribute chicken production to alternative facilities after shutting down additional plants does not address the perceived necessity for an overall reduction in chicken production. Despite this, Goldman remains convinced that Tyson is positioned to be a long-term beneficiary of the rising global demand for protein. He further emphasized that Tyson’s efficiency initiatives will be a robust catalyst for its growth trajectory.
