Bullish Forecast For Tyson After Profitable 2012

Shares of Tyson Foods, Inc. (NYSE:TSN) are trading more than 9 percent higher this morning, after the company released its quarterly earnings report. The company also announced today that it is adding a 10 cent special dividend and increasing its regular dividend by 25 percent.

Bullish Forecast For Tyson After Profitable 2012

Today, Tyson Foods, Inc. (NYSE:TSN) posted earnings that were higher than expected, rising to $185 million and 51 cents a share. Last year at this time, the company’s earnings were $97 million and 26 cents a share. Sales did drop for fiscal year 2012. They’re down from $8.4 billion a year ago to $8.37 billion. Analysts were expecting sales to be $8.48 billion.

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Although the company predicts that the next fiscal year will be another difficult one, executives still expect to make a profit for the last quarter of the year. Earlier this year, Tyson and other meat producers were battling higher feed prices because of the severe drought, which was the worst one in more than five decades. Many producers of meat reduced the size of their herds, which resulted in a 4 percent decrease in Tyson’s domestic slaughter. Since the supply of meat was lower this year, prices were higher, and Tyson profited from those higher prices.

Tyson CEO Donnie Smith said in his report that earnings for fiscal year 2013 will be flat with this year’s $1.91 a share. That’s higher than the average forecast of analysts surveyed by Thomson Reuters, which was $1.58 a share. Tyson expects 10 percent annual growth of earnings for fiscal years 2014 and 2015. It also expects sales to grow by 3 or 4 percent in the coming years.

Analysts from Morgan Stanley (NYSE:MS) and Bank of America Merrill Lynch both issued reports this morning on Tyson. Analysts at both firms say Tyson expects chicken and beef will continue to be profitable, although both meats could be lower than their normalized ranges for next year, because of the higher grain costs. They expect pork margins to be at or above the normalized ranged and margins for prepared foods to be in the normalized range for next year.

According to Morgan Stanley (NYSE:MS) analysts, Tyson Foods, Inc. (NYSE:TSN) beat their estimates for fiscal year 2012 on chicken and beef, but missed their estimates in pork and prepared foods. Bank of America Merrill Lynch analysts say Tyson’s chicken and beef also outperformed their estimates, while the company’s pork margins also missed their estimates.