Earnings preview: What does Tyson Foods bring to the table in Q2?

Tyson Foods Inc. (NYSE: TSN) is scheduled to report second quarter 2019 earnings results on Monday, May 6, before market open. Analysts expect earnings to decline 11.8% year-over-year to $1.12 per share while revenue is expected to increase 4.7% to $10.23 billion. The company has topped earnings estimates in three of the past four quarters.

The price increases in chicken, beef and pork are expected to give Tyson’s revenue a boost. Higher demand for protein-rich foods, coupled with the company’s wide range of products in this category, could also benefit the top line numbers. Shifts in consumer preferences have led to more demand for fresh and organic foods and the company’s efforts to increase its offerings in this space will help drive growth.

Tyson is also expected to see benefits from the Keystone Foods acquisition that was completed last quarter. In February, the company entered into an agreement to purchase the Thai and European operations of BRF S.A. for $340 million. This acquisition is expected to benefit the company’s protein-rich food products business in particular.

Looking at margins, Tyson is expected to benefit from higher margins in the chicken segment. The prepared foods segment is a high-margin business and can be expected to drive growth going forward. However, the company’s bottom line could be impacted by higher costs in the beef and pork categories.

In the first quarter of 2019, Tyson beat earnings estimates while revenues missed the mark. Revenues totaled $10.2 billion while adjusted EPS fell almost 13% to $1.58.

For the full year of 2019, Tyson expects revenue to be approx. $43 billion and adjusted EPS to be in the range of $5.75 to $6.10.

Tyson’s shares have gained 43% so far this year.

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