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Tyson Foods Grows on Rising Demand for Protein Products

Zacks

Buoyed by surging demand for protein packed food products and effective savings strategies, Tyson Foods, Inc. TSN has become one of the shining stars in the meat products realm. In fact, the company’s impressive past performance has also helped its shares gain 13.2% over the last six months, surpassing the industry’s 3.1% growth.

Rising Demand for Protein-Rich Products Propels Growth

Escalated demand for protein products have been one of the primary growth drivers for Tyson Foods for a while. Notably, sales volumes across the company’s Beef, Chicken and Prepared Foods segments increased 4.5%, 7.3% and 11.6%, respectively, during the first quarter of fiscal 2018.

In addition to higher demand, the Chicken and Prepared foods categories have been gaining from higher volumes, courtesy of the AdvancePierre buyout. Also, improved availability of cattle supply and higher exports boosted the Beef segment’s growth.

Encouraged by the increasing consumer preference for meat and chicken products, Tyson Foods has long been undertaking measures to expand protein-packed brands and sustain the growth momentum in these segments. The company’s investments in Memphis Meats and Beyond Meat are the latest examples in this connection.

In fact, Tyson Foods’ investment in Beyond Meat indicates the company’s efforts to venture into the meat substitutes market. Apart from this, the company has been steadily expanding fresh prepared foods offering, owing to consumers’ rising demand for natural fresh meat without any added hormones or antibiotics.



The company also invested $84 million (in August 2017) and $300 million (in November 2017) to expand poultry production capacity in Tennessee. Such efforts, combined with the acquisition of AdvancePierre and Original Philly, indicate the company’s dedicated focus on augmenting protein-packed food products. Further, it is set to make significant investments to improve the supply network within the food-service channel.

Robust Cost-Saving Efforts

In the latter half of 2017, Tyson Foods announced a Financial Fitness Program, with the objectives of enhancing operating efficiency, reduce overheads and fuel bottom line performance. Incidentally, the company generated savings of nearly $37 million from this program in the first quarter.

The company aims to generate savings from this program, through synergies from AdvancePierre’s integration along with incremental cost optimization. These efforts are estimated to generate total savings of roughly $200 million in fiscal 2018 and around $600 million by 2020.

Wrapping Up

Although there are persisting concerns surrounding higher wage and freight expenses, Tyson Foods is expected to easily overcome such hurdles, given the company’s strong segmental performance and savings initiatives. This Zacks Rank #2 (Buy) company boasts of a strong product portfolio spread across a number of global markets. Well, with such positive factors rolled up in its sleeves, Tyson Foods is expected to continue growing and attain new heights.

Greedy for Consumer Staples Stocks? Check These

Investors interested in the same sector may consider the likes of United Natural Foods UNFI, Estee Lauder Companies EL and Sysco SYY, all carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

United Natural came up with an average positive earnings surprise of 2.3% in the trailing four quarters. It has a long-term earnings growth rate of 6.2%.

Estee Lauder pulled off an average positive earnings surprise of 18.1% in the trailing four quarters. It has a long-term earnings growth rate of 12.9%.

Sysco delivered an average positive earnings surprise of 1.1% in the trailing four quarters. It has a long-term earnings growth rate of 10.1%.

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