Tyson Foods reported better than expected second-quarter results. Should I invest in May?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the outdoors, enjoys… read more.
on May 15, 2021
  • Tyson Foods reported better-than-expected second-quarter results
  • Total revenue has increased by 3.8% Y/Y to $11.3 billion
  • Tyson Foods trades at less than eight times 2020 EBITDA

Tyson Foods shares have advanced from $64.5 above $81.7 since the beginning of January 2021, and the current price stands around $80.34. Tyson Foods continues to expand its business, and at the current stock price, this company is fairly valued.

Fundamental analysis: Tyson Foods has a strong demand for its products

Tyson Foods is an American multinational corporation that is the world’s second-largest processor and marketer of chicken, beef, and pork after JBS. The company’s business has proven resilient throughout the pandemic, and the company reported better than expected second-quarter results this week.

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Total revenue has increased by 3.8% Y/Y to $11.3 billion, while the GAAP EPS was $1.30 for the second fiscal quarter (beats by $0.20). Dean Banks, President, and CEO of the company, is very optimistic about the continued success of Tyson Foods, which is positioned for long-term, sustainable growth.

“Our long-term outlook is bright as global protein (beef, pork, chicken, and turkey) consumption continues to grow, and we expect our investments in capacity expansion, product innovation, and technology to create sustainable shareholder value,” said Dean Banks.

Tyson Foods has a strong demand for its products and the right management team to scale and improve efficiency. Sales volume of Chicken business have decreased during the second quarter, but the company will continue to work on a full recovery of this segment.

Tyson Foods expects revenues of $44 billion – $46 billion for fiscal 2021, while the board of directors announced that the company is prepared for an accelerating inflationary environment. The company declared a $0.445/quarterly share dividend, which will be payable on September 15 to stockholders of record as of August 31, 2021.

Tyson Foods (NYSE: TSN) trades at less than eight times 2020 EBITDA, and with a market capitalization of $28.8 billion, shares of this company are fairly valued.

Technical analysis: Bulls remain in control of the price action

Data source: tradingview.com

Shares of this company have been moving in an uptrend last several months, and if the price jumps above $82.5, it would be a signal to trade Tyson Foods shares, and we have the open way to $85.

On the other side, if the price falls below $75, it would be a strong “sell” signal, and the next target could be around $70. Traders should have in mind that if the U.S. stock market enters a more significant correction phase, the share price could be at much lower levels.

Summary

Tyson Foods reported better-than-expected second-quarter results this week, and the company declared a $0.445/quarterly share dividend, which will be payable on September 15. Tyson Foods raised its fiscal 2021 guidance and reported that it expects net sales in the range from $44 billion to $46 billion. Tyson Foods trades at less than eight times 2020 EBITDA, and with a market capitalization of $28.8 billion, shares of this company are fairly valued.

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