Tyson Foods (NYSE:TSN) Misses Q1 Revenue Estimates

Anthony Lee /
2024/05/06 7:48 am EDT

Meat company Tyson Foods (NYSE:TSN) missed analysts' expectations in Q1 CY2024, with revenue flat year on year at $13.07 billion. It made a non-GAAP profit of $0.62 per share, improving from its loss of $0.04 per share in the same quarter last year.

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Tyson Foods (TSN) Q1 CY2024 Highlights:

  • Revenue: $13.07 billion vs analyst estimates of $13.16 billion (small miss)
  • EPS (non-GAAP): $0.62 vs analyst estimates of $0.40 (56.8% beat)
  • Gross Margin (GAAP): 6.6%, up from 4.7% in the same quarter last year
  • Free Cash Flow was -$390 million, down from $946 million in the previous quarter
  • Sales Volumes were down 1.5% year on year
  • Market Capitalization: $22.1 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 Food

The 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 Growth

Tyson 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 6.9% over the last three years was mediocre for a consumer staples business.

Tyson Foods Total Revenue

This quarter, Tyson Foods missed Wall Street's estimates and reported a rather uninspiring 0.5% year-on-year revenue decline, generating $13.07 billion in revenue. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months.

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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.

Tyson Foods Year-On-Year Volume Growth

In Tyson Foods's Q1 2024, sales volumes dropped 1.5% year on year. This result was a reversal from the 3.3% year-on-year increase it posted 12 months ago. A one quarter hiccup shouldn't deter you from investing in a business. We'll be monitoring the company to see how things progress.

Key Takeaways from Tyson Foods's Q1 Results

We were impressed by how significantly Tyson Foods blew past analysts' gross margin, operating income, and EPS expectations this quarter. We were also glad its full-year operating income guidance beat Wall Street's estimates, though its revenue outlook fell short. Zooming out, we think this was a great quarter that shareholders will appreciate. The stock is up 2.1% after reporting and currently trades at $63.23 per share.

Tyson Foods may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.