Tyson Foods Stock is Clucking Ahead

Global meat and poultry products producer Tyson Foods NYSE: TSN stock recently set new all-time highs on a blowout fiscal Q1 2022 earnings report. However, shares have been sliding since peaking. While inflationary pressures rose 18%, they were able to raise prices 19.6% on average as consumers felt the pinch in grocery stores. Inflationary tailwinds helped bolster margins as the Company passed on higher feed costs and supply chain disruption costs to consumers. The owners of well-known brands Jimmy Dean, Hillshire Farm, Ball Park and Tyson has proven its pricing power at scale. The bottom line is that demand is still outpacing supply despite logistics constraints felt throughout the country. The Company has plans to bolster capacity with the construction of 12 new facilities and a $2 billion investment in automation and innovation. Shares are trading at high 11X forward earnings. Prudent investors seeking exposure in a benefactor of inflationary pressures can watch for opportunistic pullbacks in shares of Tyson Foods.

Q1 Fiscal 2022 Earnings Release

On Feb. 7, 2021, Tyson Foods reported its fiscal Q1 2022 earnings for the quarter ended in December 2021. The Company reported earnings-per-share (EPS) profits of $2.87, blowing away consensus analyst estimates for $1.93 by $0.94. Revenues grew 23.6% year-over-year (YoY) to $12.93 billion versus $12.17 billion analyst estimates. The Company reaffirmed its full-year fiscal 2022 revenues of $49 billion to $51 billion matching analyst estimates. Tyson CEO Donnie King commented, “Our performance reflects the resilience of our multi-protein portfolio even with continued volatility in the marketplace. We remain committed to winning with our team members, winning with our customers and consumers, and winning with excellence. We have the right team who are taking the right actions and as a result, we believe our future is bright.”

Conference Call Takeaways

CEO King stated his plan to grow revenues and profits aggressively in the next three year are well ahead of schedule achieving double-digit growth compared to high single digit growth goal. This was driven by strong performance in peek and “earlier than expected” recovery in chicken and port as well as prepared foods. Chicken was a very strong performer as volumes grew 3.6%. The Company plans to bolster capacity and growth with the construction of 12 new plants. Inflation was offset as its cost of goods rose 18% YoY, but its average sales price rose 19.6% YoY passing high input costs, supply chain constraints, labor, and transportation to consumers. He notes that customer demands still continue to outpace its ability to supply products. To maintain a galvanized workforce, the Company provided hourly team members with over $50 million in bonuses in the quarter. As for logistics, the Company continues to expand its direct shipment program in addition to its ongoing optimization of the mix of private, dedicated, and third-party fleet utilization to mitigate inflation and delivery on-time to customers.

Tyson Foods Stock Trajectories

Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for TSN stock. The weekly rifle chart recently peaked at the $100.72 Fibonacci (fib) level. The weekly uptrend stalled on the earnings gap up and pullback as the 5-period moving average (MA) support flattens at the $92.13 fib followed by a rising 15-period MA at the $87.74 fib level. The weekly upper Bollinger Bands (BBs) sit at $99.85. The weekly stochastic formed a mini inverse pup as it falls under the 80-band, setting up the channel tightening to the 5-period MA and possible 15-period MA. The daily rifle chart peak and formed a channel tightening as the 5-period MA slopes down at $94.90 towards the 15-period MA at $94.14 for a potential breakdown on a crossover down. The daily stochastic peaked off the 90-band to fall through the 60-band. The daily market structure low (MSL) buy signal triggered on the $90.86 breakout. The daily 50-period MA support sits at $90.03, and the daily 200-period MA sits at $80.86. Prudent investors can watch for opportunistic pullbacks at the $92.13 fib, $90.86 fib, $89.47 fib, $87.74 fib, $84.85 fib, $83.04 fib, and the $80.79 fib level. Upside trajectories range from the $98.16 fib up towards the $114.67 fib level.