Tyson Foods Stock is Looking Tasty

Global meat and poultry products producer Tyson Foods NYSE: TSN stock continues to surge higher in the post-pandemic reopening era. The maker of such brands including Jimmy Dean, Hillshire Farm, Ball Park, and State Fair is having a banner recovery year with double-digit revenue growth. The Company has emerged from the pandemic a more efficiently operated and optimized organization that is putting the scandals behind it and actively improving its workplace environment. Automation and digital transformation have also helped to improve margins and supply chain complexity. The Company has added additional capacity coming online for prepackaged beef and pork products in its Utah and South Carolina facilities. Rising food inflation is successfully being passed onto its customers to offset raw materials costs improving prices by nearly 16% resulting in higher margins. The Company will continue to invest in automation and artificial intelligence (AI) to continue to deliver productivity gains. Prudent investors seeking exposure can watch for opportunistic pullbacks in shares of Tyson Foods.

Q3 Fiscal 2021 Earnings Release

On Aug. 9, 2021, Tyson Foods reported its fiscal Q3 2021 earnings for the quarter ended in June 2021. The Company reported earnings-per-share (EPS) profits of $2.70, blowing away consensus analyst estimates for $1.67 by $1.03. Revenues grew 22.1% year-over-year (YoY) to $12.48 billion versus $11.52 billion analyst estimates. Tyson CEO Donnie King commented, “We delivered a strong performance in a strong protein market. With trusted brands that met strong consumer demand, we have delivered 12 consecutive quarters of share gains in core business lines at retail. Our food service volume improved as the restaurant industry began to reopen and recover. Our beef business increased production to meet strong U.S. and international demand for higher-quality products. And we continued to build financial strength, reducing our debt, and investing in future growth by laying out plans to expand our business, both to address capacity constraints and meet growing demand.”

Upside Guidance

Tyson Foods raised fiscal full-year 2021 guidance to revenues between $46 billion to $47 billion versus $45.19 billion consensus analyst estimates. Capex is expected around $1.3 billion in fiscal 2021.

Conference Call Takeaways

CEO King set the tone, n all, Tyson delivered a strong quarter. As we look to the future, we want to build on these strengths. Let’s look at how we plan to do that. First, we have built a solid footing to drive consistent results. Our strengths include a diverse portfolio, well-known, trusted brands, scale in meaningful markets, and an exceptionally strong balance sheet. Second, labor is our number one challenge, so we have continued our focus on improving our team member experience without compromising their health and safety. We are accelerating efforts to make Tyson the most sought after place to work because we know how important team members are to our business. One of the ways we’re doing this is to accelerate our investments in automation and technology. This not only helps us to eliminate more difficult, hard-to-fill tasks but also re-skills our labor profile to enable their contributions to more value-added activities. Third, we are actively working to recover volume from pandemic lows and in doing so improve the reliability we offer our customers. Dynamic and evolving channel demand continues to create operational complexity. We took steps earlier this year to make our organization more responsive to demand signals and to accelerate our speed to market by getting our sales teams closer to their customers. There is more to do, however, and so our work here continues.” He concluded, “Fourth, our focus on operational excellence and disciplined cost management is especially important during periods of continued market volatility and increasing inflationary pressures. As you will hear today, we continue to be laser-focused in making progress in restoring the competitiveness of our chicken segment. We are also accelerating actions across our enterprise to become more operationally excellent.”

Workplace Improvement

CEO King underscored its workforce initiatives, “We want to be the most sought-after place to work. This starts with an unrelenting focus on safety every minute, every shift, every day. Health and safety have been and will continue to be our top priority. We have a history of using all the tools at our disposal to protect our team members, and the vaccine is no different. As many of you will have seen, last week we announced that Tyson will require COVID-19 vaccinations for our entire U.S. workforce by November 1. We do this now because the delta variant is more contagious and getting vaccinated is the single most effective thing people can do to protect themselves, their families, and their communities. We have raised wages in many markets to ensure we’re competitive and are exploring other ways to make Tyson the most sought-after place to work in the communities where we operate. For example, we are piloting childcare facilities at some of our plants, and we have opened medical clinics to make healthcare more accessible to team members and their families. Finally, we are accelerating investments in automation and advanced technologies to make the team members’ jobs easier. We look forward to providing more detail on our automation and technology road map at our upcoming investor day. We’re taking aggressive actions to add new capacity to meet demand, adjust our product mix by plant, and match our portfolio more closely with the customer and consumer needs. We are listening to our customers and are committed to improving the reliability of supply.

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 shows a potential seed wave pattern for two consecutive higher lows. The weekly rifle chart is setting up a pup breakout as the 5-period moving average (MA) support starts to slope up at $76.74. Bulls are awaiting the weekly stochastic cross back up just below the 60-band. The weekly upper Bollinger Bands (BBs) sit near the $94.40 Fibonacci (fib) level. The daily rifle chart is also forming a potential pup breakout after trigger the daily market structure low (MSL) buy signal above $77.06. The daily 5-period MA is starting to slope up at $78.45 with upper daily BBs at $80.98. The daily stochastic is also attempting to cross back up unless it fades down with a mini inverse pup. Prudent investors can watch for opportunistic pullbacks at the $77.65 fib, $76.63 fib, $74.88 fib, $72.41 fib, $70.55 fib, and the $69.09 fib. Upside trajectories range from the $86.77 fib upwards to the $99.24 fib level.