Meat manufacturer Tyson Foods Inc. (TSN) is set to report its fourth-quarter results on Tuesday at 7:30 am. The demand for pork and beef is likely to rise in the quarter as well as volatile meat prices could remain beneficial for the company. This could drive the top line while higher costs and expenses are likely to hurt the bottom line.
Analysts, on average, expect Tyson Foods to post earnings of $1.35 per share on revenue of $10.27 billion for the fourth quarter. In comparison, during the previous year quarter, the company reported a profit of $1.43 per share on revenue of $10.14 billion. Majority of the analysts recommended a “strong buy” and “buy” rating on the stock with an average price target of $71.21.
The company’s top line is likely to be driven by the strong sales from Beef and Prepared Foods segments. Oversupply and pricing headwinds remained a major concern for the total sales growth. It is expected that the Chicken and Pork segments will face stiff headwinds.
The rising demand for protein-rich products could be fueling the growth of the Beef and Prepared Foods segment. The increasing health consciousness is likely to increase the demand for fresh and organic food options.
For the third quarter, earnings jumped 21% to $541 million or $1.47 per share, on strong sales from Beef and Prepared Foods. Net sales rose 2% to $10 billion.
For the full year 2018, Tyson Foods had expected sales growth of about 6% to the range of $40 billion to $41 billion. For fiscal 2019, volume growth, mix and the impact of the Tecumseh Poultry and American Proteins acquisitions could drive sales growth to $42 billion.
Capital expenditures are projected to be about $1.2 billion to $1.3 billion range for fiscal 2018 and $1.6 billion for fiscal 2019. In fiscal 2019, the company has expected industry fed cattle supplies growth in Beef of about 2%, and industry hog supplies growth in Pork of about 3%.
During mid-September, the company’s board of directors has appointed Noel White as president and chief executive officer. White succeeded Tom Hayes, who stepped down for personal reasons. In addition, the company reaffirmed its adjusted EPS guidance for fiscal 2018 in the range of $5.70 to $6.00.
In the mid-August, the company agreed to purchase the Keystone Foods business from Marfrig Global Foods for $2.16 billion in cash. The acquisition is expected to be accretive to GAAP EPS in the third year and accretive to adjusted EPS in the first year. Annual synergies of about $50 million are predicted to be generated by the third year of the acquisition. The deal is expected to close in mid-fiscal 2019.
Shares of Tyson opened Friday’s regular session higher and is trading in the green territory. The stock fell over 16% in the past year and over 23% in the year so far.