Tyson Foods, Inc. - NYSE:TSN - Comprehensive analysis
From the beginning of 2022 to late October 2023, Tyson Foods’ shares declined nearly 50%, underperforming the Morningstar US Market Index (down 5%), as well as protein-centric peers Pilgrim’s Pride (down 7%) and Hormel (down 33%). Although Tyson has rebounded nearly 20% since then, its shares remain significantly below our fair value estimate, presenting attractive risk-adjusted upside along with a healthy dividend yield exceeding 3.7%. Tyson's adjusted EBITDA fell 62% from fiscal 2022 to fiscal 2023. As a no-moat food producer primarily reliant on raw meats for revenue, Tyson faces volatility in input costs and product pricing. This has been particularly challenging recently due to rampant cost inflation and supply/demand issues in the beef market. Additionally, the recovery of the US cattle supply will take time. However, we believe the current stock price suggests that these challenging conditions will persist. Meat markets are cyclical, and a return to a more normal operating environment is all that is needed to support our valuation. The chicken market has already shown signs of recovery, with 12-month trailing adjusted EBITDA increasing by over 40% at the end of the second quarter of fiscal 2025 (ended March). Furthermore, we do not anticipate any structural changes in meat markets that would necessitate a permanent alteration in profitability. Therefore, we project 2% top-line growth over the next five years, with adjusted operating margins recovering to our 2029 estimate of 6.9%, aligning with historical levels and improving from the fiscal 2024 estimate of approximately 3.4%.
Free evaluation through quantitative algorithms Tyson Foods, Inc. - NYSE:TSN
Growth-Scoring Model Detail
Total Revenue Growth Over Prior Year | 1.27 | Market 34 Sector 43 |
Gross Profit Growth Over Prior Year | 41.9 | Market 97 Sector 93 |
EBITDA Growth Over Prior Year | 62 | Market 97 Sector 97 |
EBITA Growth Over Prior Year | 143 | Market 99 Sector 99 |
EBIT Growth Over Prior Year | 189 | Market 98 Sector 99 |
Earnings from Cont. Ops. Growth Over Prior Year | 0 | Market 0 Sector 0 |
Net Income Growth Over Prior Year | 0 | Market 0 Sector 0 |
Normalized Net Income Growth Over Prior Year | 354 | Market 98 Sector 98 |
Diluted EPS before Extra Growth Over Prior Year | 0 | Market 0 Sector 0 |
A/R Growth Over Prior Year | 2.65 | Market 52 Sector 53 |
Inventory Growth Over Prior Year | 0.53 | Market 55 Sector 50 |
PPE Net Growth Over Prior Year | -3.3 | Market 24 Sector 20 |
Total Assets Growth Over Prior Year | 1.53 | Market 41 Sector 41 |
Tangible Book Value Growth Over Prior Year | 30.6 | Market 82 Sector 85 |
Common Equity Growth Over Prior Year | 1.94 | Market 43 Sector 41 |
Cash from Ops. Growth Over Prior Year | 1.35 | Market 48 Sector 50 |
CAPEX Growth Over Prior Year | -38.44 | Market 8 Sector 13 |
Dividend per Share Growth Over Prior Year | 2.07 | Market 51 Sector 65 |
Levered Free Cash Flow Growth Over Prior Year | 44.5 | Market 85 Sector 83 |
Unlevered Free Cash Flow Growth Over Prior Year | 41.7 | Market 84 Sector 80 |
Profitability-Scoring Model Detail
Gross Margin % | 7.77 | Market 2 Sector 3 |
SG&A Margin % | 3.97 | Market 5 Sector 3 |
EBITDA Margin % | 6.3 | Market 12 Sector 45 |
EBITA Margin % | 4.23 | Market 10 Sector 40 |
EBIT Margin % | 3.8 | Market 12 Sector 38 |
Earnings from Cont. Ops Margin % | 2 | Market 17 Sector 36 |
Net Income Margin % | 1.96 | Market 17 Sector 36 |
Net Income Avail. for Common Margin % | 1.96 | Market 17 Sector 36 |
Normalized Net Income Margin % | 1.89 | Market 9 Sector 32 |
Levered Free Cash Flow Margin % | 2.08 | Market 14 Sector 45 |
Unlevered Free Cash Flow Margin % | 2.64 | Market 14 Sector 43 |
Return on Assets % | 3.44 | Market 15 Sector 25 |
Return on Capital % | 4.51 | Market 15 Sector 23 |
Return on Equity % | 5.82 | Market 22 Sector 29 |
Return on Common Equity % | 5.74 | Market 24 Sector 29 |
Total Asset Turnover | 1.45 | Market 81 Sector 58 |
