Tyson Foods Gains From Protein Packed Brands, Costs High
Zacks Investment Research | Sep 18, 2019 07:27AM ET
Tyson Foods, Inc. (NYSE:TSN) , a renowned meat products manufacturing company, is attracting investors on the back of a robust portfolio of protein-packed brands. Moreover, efforts such as acquisitions and efficiency-building programs have been yielding. However, the company continues to witness challenges in the ongoing fourth quarter of fiscal 2019. Moreover, persistent weakness in the Prepared Foods segment is a worry. Let’s take a closer look.
Efforts to Boost Portfolio Bode Well
Tyson Foods boasts a rich portfolio of protein-packed brands that are growing rapidly across the globe. During the first, the second and the third quarter of fiscal 2019, the company delivered higher sales in the chicken and beef categories year over year. Moreover, during the third quarter, the Pork segment performed well. Solid performances across these categories boosted the top line in the said quarter.
We note that acquisitions have played an important role in boosting the company’s portfolio. The company expects to keep gaining from the integration of Keystone and the newly-acquired Thai and European assets. Recently, the company entered into an agreement to invest in the foods segment of Brazil’s Grupo Vibra (Vibra Foods). The move is likely to bolster Tyson Foods’ access to Brazilian poultry supplies.
Apart from this, the company is steadily expanding fresh meat offerings on consumers’ rising demand for food without added hormones or antibiotics. In this respect, Tyson Foods’ buyout of Tecumseh is quite noteworthy. The company is venturing into alternative sources for meat and protein products, evident from investments in Memphis Meats and New Wave Foods. Further, the company is on track with new plant-based and blended products launches under the Raised & Rooted brand.
Tyson Foods expects demand for protein to rise consistently. It is well positioned to benefit from all opportunities in the space. For fiscal 2020, USDA expects overall domestic protein production (chicken, beef, pork and turkey) to rise roughly 2% year over year. A similar rate of growth is expected for fiscal 2019 as predicted by the USDA earlier. Such upsides along with optimistic sales view for fiscal 2019 are encouraging and boosting investors’ optimism. The Zacks Rank #3 (Hold) company’s shares have gained almost 15% in the past three months compared with the Zacks Investment Research
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