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Meat company Tyson Foods (NYSE:TSN) reported Q2 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 1.6% year on year to $13.35 billion. It made a non-GAAP profit of $0.87 per share, improving from its profit of $0.15 per share in the same quarter last year.
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Tyson Foods (TSN) Q2 CY2024 Highlights:
- Revenue: $13.35 billion vs analyst estimates of $13.21 billion (1.1% beat)
- EPS (non-GAAP): $0.87 vs analyst estimates of $0.67 (30.3% beat)
- Gross Margin (GAAP): 6.6%, up from 5.2% in the same quarter last year
- Adjusted EBITDA Margin: 5.2%, up from 3.8% in the same quarter last year
- Free Cash Flow of $533 million is up from -$390 million in the previous quarter
- Sales Volumes rose 1.1% year on year, in line with the same quarter last year
- Market Capitalization: $21.8 billion
Started as a simple trucking business, Tyson Foods (NYSE:TSN) today is one of the world’s largest producers of chicken, beef, and pork.
Perishable FoodThe perishable food industry is diverse, encompassing large-scale producers and distributors to specialty and artisanal brands. These companies sell produce, dairy products, meats, and baked goods and have become integral to serving modern American consumers who prioritize freshness, quality, and nutritional value. Investing in perishable food stocks presents both opportunities and challenges. While the perishable nature of products can introduce risks related to supply chain management and shelf life, it also creates a constant demand driven by the necessity for fresh food. Companies that can efficiently manage inventory, distribution, and quality control are well-positioned to thrive in this competitive market. Navigating the perishable food industry requires adherence to strict food safety standards, regulations, and labeling requirements.
Sales GrowthTyson Foods is one of the most widely recognized consumer staples companies in the world. Its influence over consumers gives it extremely high negotiating leverage with distributors, enabling it to pick and choose where it sells its products (a luxury many don't have).
As you can see below, the company's annualized revenue growth rate of 5.1% over the last three years was sluggish for a consumer staples business.
This quarter, Tyson Foods reported decent year-on-year revenue growth of 1.6%, and its $13.35 billion in revenue topped Wall Street's estimates by 1.1%. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months, a deceleration from this quarter.
Volume Growth Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
Tyson Foods's quarterly sales volumes have, on average, stayed about the same over the last two years. This stability is normal because the quantity demanded for consumer staples products typically doesn't see much volatility.
In Tyson Foods's Q2 2024, sales volumes jumped 1.1% year on year. This result was an acceleration from the 0.3% year-on-year increase it posted 12 months ago, certainly a positive signal.
Key Takeaways from Tyson Foods's Q2 Results We were impressed by how significantly Tyson Foods blew past analysts' EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street's estimates. On the other hand, its gross margin missed analysts' expectations. Overall, this was a mixed but decent quarter for Tyson Foods. The stock traded up 2.1% to $62.52 immediately following the results.
