Tyson Foods To Vend TNT Crust: Here's What You Must Know

Tyson Foods, Inc. (NYSE:TSN) , which has been trying all means to increase focus on protein-rich products, revealed that it is looking for potential buyers for its pizza crust business, TNT Crust. The idea behind this planned divestiture is to focus more on the company’s key growth area — protein-packed offerings.

Well, Tyson Foods has long been riding on this strategy, given the escalating consumer demand for protein products. Prior to this, the company had undertaken divestiture of several other non-protein business such as Sara Lee Frozen Bakery, Kettle and Van’s so as to focus more on the growing protein-packed food arena.

Thus, the sale of its pizza crust business would be another step in this path. We note that this business forms part of Tyson Foods’ Prepared Foods segment, which recorded a 21% surge in revenues to $2,292 million in the first quarter of fiscal 2018. However, much of this is attributable to contributions from AdvancePierre, which was acquired last year with an intent to bolster the company’s protein-packed offerings. This, in itself speaks volumes about the surging preference toward this food category.

Divesting Pizza Crust: Another Solid Growth Strategy

Coming back to yesterday’s development, management stated that the divestiture of TNT Crust will involve the sale of Tyson Foods’ pizza crust venture of flat breads, self-rising crusts and partially baked crusts. Also, it will include the sale of two manufacturing facilities in Green Bay, Wisconsin. Thus, the deal is likely to be promising to any potential buyer, as it will include the transfer of the entire pizza crust business, both facilities as well as the team members. However, Tyson Foods will continue to hold the tortilla production from these manufacturing facilities, with plans of using them in other parts of its business.

Further, the company remains focused on aligning its growth efforts toward the profitable protein-rich arena. Markedly, rising demand for protein products have been one of the primary growth drivers for Tyson Foods for a while. This is evident from the fact that sales volumes across the company’s Beef, Chicken and Prepared Foods segments increased 4.5%, 7.3% and 11.6%, respectively, during the first quarter of fiscal 2018.

Encouraged by the increasing consumer preference for meat and chicken products, Tyson Foods has long been undertaking measures to expand protein-packed brands and sustain the growth momentum in these segments. The company’s investments in Memphis Meats and Beyond Meat are the latest examples in this connection.

In fact, Tyson Foods’ investment in Beyond Meat indicates the company’s efforts to venture into the meat substitutes market. Apart from this, the company has been steadily expanding fresh prepared foods offering, owing to consumers’ rising demand for natural fresh meat without any added hormones or antibiotics.

The company also invested $84 million (in August 2017) and $300 million (in November 2017) to expand poultry production capacity in Tennessee. Such efforts, combined with the acquisition of AdvancePierre and Original Philly, indicate the company’s dedicated focus on augmenting protein-packed food products.

Clearly, the Zacks Rank #2 (Buy) company has been firing on all cylinders to exploit the rising protein demand, which has helped it rally 21.6% in a year, easily crushing the industry’s 13% growth. We believe that such dedicated efforts in this connection, as underscored by the aforementioned announcement, is likely to drive the stock further.

Looking for More? Check These Solid Food Stocks

United Natural Foods (NASDAQ:UNFI) , with a solid earnings surprise history and a long-term earnings growth rate of 8.2% boasts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hormel Foods (NYSE:HRL) , with a long-term earnings growth rate of 9.3% carries a Zacks Rank #2.

Pilgrim’s Pride (NASDAQ:PPC) , also carrying a Zacks Rank #2 flaunts an impressive earnings surprise history.

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