February update: should you buy or sell Tyson Foods?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Feb 16, 2021
  • Tyson Foods shares continue to trade below the $70 resistance level
  • Stephens hiked its rating for Tyson Foods
  • Tyson Foods reported FQ1 results; total revenue has decreased only -3.3% Y/Y

Tyson Foods (NYSE: TSN) shares continue to trade below a strong resistance level that stands at $70, and with a $23.9B market capitalization, this company is still undervalued relative to its competition.

Fundamental analysis: Tyson Foods is positioned for sustainable growth

Tyson Foods is an American multinational corporation that is the world’s second-largest processor and marketer of chicken, beef, and pork after JBS. Tyson Foods shares didn’t make any significant move in the last several months even though the company’s business has proven stability throughout the Covid-19 pandemic.

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Tyson Foods reported FQ1 results last week; total revenue has decreased only -3.3% Y/Y to $10.46B while Q1 Non-GAAP EPS was $1.94 (beats by $0.44). The company has declared a $0.445/quarterly share dividend, which will be payable on June 15.

“We delivered strong operating earnings performance, exceeding $1 billion in operating income for the quarter. This performance was driven by higher earnings in our Prepared Foods, Beef, and Chicken segments, and demonstrates our effectiveness in addressing customer and consumer needs while continuing to manage the ongoing effects of the global pandemic,” said  Dean Banks, President, and CEO of Tyson Foods.

The management remains optimistic about the continued success of Tyson Foods, which is positioned for long-term, sustainable growth. It is important to say that Stephens hiked its rating for Tyson Foods on expectations the meat industry will see earnings growth in the upcoming months.

 “We have increased confidence that higher grain prices will drive production restraint in the intermediate-term and when coupled with improving demand we expect to see chicken prices improve after a multi-year down-cycle in pricing,” Stephens reported

This company has a strong demand for its products and the right management team to scale and improve efficiency. Tyson Foods is fairly valued at the current stock price, and it could deliver strong shareholder value for many years to come.

Technical analysis: $70 represents a strong resistance level

The current stock price gives investors the opportunity to achieve good returns, and with the market capitalization of $23.9B, this company is still undervalued relative to its competition. The company’s business has proven resilient throughout the pandemic, and shares of this company look like a good value investment.

Data source: tradingview.com

The critical support levels are $65 and $60; $70 and $75 represent the resistance levels. If the price jumps above $70, it would be a signal to buy shares, and the next target could be around $75. On the other side, if the price falls below the $60 support level, we have the open way to $55 or even $50.

Summary

Tyson Foods shares didn’t make any significant move in the last several months, although its business has proven stability throughout the Covid-19 pandemic. Tyson Foods has declared a $0.445/share quarterly dividend, and Stephens hiked its rating for Tyson on expectations the meat industry will see earnings growth in the upcoming months.

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