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Tyson Foods Shares Plummet On Weak Q4 Earnings, 2017 Forecast

Monday, November 21, 2016 6:17
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Protein and prepared foods producer Tyson Foods, Inc. (NYSE:TSN) early Monday posted weak fiscal fourth quarter numbers and offered a tepid 2017 outlook, sending its shares plunging in morning trading.

The Springdale, AR-based company reported Q4 EPS of $0.96, a full 20 cents worse than the average Wall Street estimate of $1.16. Revenues fell 12.8% from last year to $9.16 billion, also badly missing analysts’ view of $9.41 billion.

Tyson noted that chicken sales volume fell 10% in the latest period, with prices rising 3.5%. Beef volume was down 7.4% despite a steep 14.9% price drop. Pork volume fell 6.8%, with prices up 1%, and prepared foods volumes declined 4.8% on 3.9% lower price.

Looking ahead, Tyson forecast weaker than expected 2017 earnings. TSN said it expects full-year EPS to range from $4.70 to $4.85, which would badly miss the average analyst estimate of $4.99.

The company commented via press release:

“The first seven weeks of fiscal 2017 have been phenomenal as we are off to the best start we have ever experienced.”

“We produced record earnings per share, operating income and operating margin. “We’re growing where we want to grow by selling more branded, higher margin products. Sales volume was up in our Core 9 product lines at retail and our top tier products in foodservice. “The Prepared Foods segment had a record margin for the year, while simultaneously driving industry-leading category growth at retail. The Pork segment had a record year as well, while the Chicken segment nearly matched last year’s record margin. The Beef segment is a great turnaround story, producing normalized margins for the year.”

Despite the disappointing numbers, Tyson still boosted its quarterly dividend payout by 50%. TSN also noted that Tom Hayes, current President of Tyson Foods, will succeed Donnie Smith as Chief Executive Officer on December 31, 2016. Smith will continue to consult with the company for three years.

Tyson Foods shares fell $5.61 (-8.33%) to $61.75 in premarket trading Monday. Prior to today’s report, TSN had gained 26.31% year-to-date, versus a 7.17% rise in the benchmark S&P 500 during the same period.


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