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Tyson Foods (TSN) to Post Q3 Earnings: What Awaits the Stock?

By Zacks Investment ResearchStock MarketsAug 03, 2021 10:59PM ET
Tyson Foods (TSN) to Post Q3 Earnings: What Awaits the Stock?
By Zacks Investment Research   |  Aug 03, 2021 10:59PM ET
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Tyson Foods (NYSE:TSN), Inc. TSN is likely to register top- and bottom-line growth when it reports third-quarter fiscal 2021 results on Aug 9, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $11,199 million, which suggests a rise of 11.7% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for the bottom line has gone up 12% in a week and is currently pegged at $1.77 per share. The estimate suggests growth of 26.4% from the year-ago quarter’s reported figure. Notably, this meat product giant’s bottom line has outpaced the Zacks Consensus Estimate by 20.7% in the last reported quarter. It has a trailing four-quarter earnings surprise of 39.1%, on average.

Key Aspects to Note

Tyson Foods’ top line is likely to have gained from growth in its retail business during the third quarter. The company’s retail business has been benefitting from favorable demand conditions as at-home consumption continues to prevail amid the pandemic. In the last earnings call, management highlighted that the company expects elevated demand in retail with volumes continuing to surpass pre-pandemic levels in Prepared Foods. The company has been ramping up production capacity to meet elevated demand conditions.

The company’s third-quarter performance is likely to have gained from sequential improvement in foodservice business. The foodservice channel is benefitting from rise in outdoor dining practices, thanks to easing of pandemic restrictions and mass vaccinations.

Tyson Foods’ e-commerce channel is seeing solid growth as more consumers are buying online amid the pandemic. Continuation of this trend is likely to have aided top-line growth in the to-be-reported quarter. The company is also likely to have gained from upsides such as strong brand portfolio, robust geographical reach and the ability to manufacture locally in international markets. It is also focused on higher protein production to cater to the rising demand for protein-packed food. The company is steadily expanding fresh prepared foods and plant-based offerings.

Headwinds emerging from incremental expenses associated with the pandemic are likely to have been a drag during the third quarter. Also, adverse impacts from a tight labor market as well as higher transportation and raw materials costs cannot be ignored.

What the Zacks Model Unveils

Our proven model predicts an earnings beat for Tyson Foods this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Tyson Foods has a Zacks Rank #3 and an Earnings ESP of +11.17%.

Other Stocks With Favorable Combination

Here are some more companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Chewy (NYSE:CHWY) Inc. CHWY currently has an Earnings ESP of +20% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Darling Ingredients (NYSE:DAR) Inc. DAR currently has an Earnings ESP of +10.09% and a Zacks Rank #2.

Sprouts Farmers (NASDAQ:SFM) Market, Inc. SFM has an Earnings ESP of +2.95% and a Zacks Rank #3, at present.

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Tyson Foods (TSN) to Post Q3 Earnings: What Awaits the Stock?

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Tyson Foods (TSN) to Post Q3 Earnings: What Awaits the Stock?

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