May 09, 2022

Shares of Tyson Foods (NYSE:TSN) are up more than 2% in premarket trading Monday after the company issued a stronger-than-expected FY sales forecast.

TSN reported Q2 adjusted EPS of $2.29, up from $1.34 in the year-ago period and above the analyst consensus of $1.90 per share. The company said it generated $13.12 billion in sales in the quarter, up 16% YoY, topping the consensus estimates of $12.85 billion. However, sales volume was down 1.5% in the period.

Tyson reported an operating margin of 8.8% in Q2, compared to 6.4% in the same period last year. Average price was up +17.6% in the quarter, while analysts were looking for +10.9%.

Looking ahead, Tyson expects FY sales in the range of $52 billion to $54 billion, compared to its previous forecast range of $49 billion to $51 billion, and compared to the consensus projection of $51.8 billion.

Tyson is targeting $1 billion in productivity savings by the end of FY 2024 and over $400 million in FY 2022, compared to the FY 2021 cost baseline. The company is expected to meet its productivity savings target for FY 2022.

Goldman Sachs analyst Adam Samuelson expects to see a positive reaction in TSN shares following today’s report.

“Margins/EBIT above-consensus in the three largest US segments (Beef, Chicken, Prepared Foods) and full-year earnings expectations increased despite ongoing inflationary pressures,” Samuelson said in a client note.

By Senad Karaahmetovic