Tyson Gains While Pigs Die

reminiscences of a stock operator pdf

While U.S. pork production could drop by nearly 5% this year owing to a deadly virus which has killed millions of piglets in the last year; Tyson Foods, Inc. (NYSE:TSN) appears to be well positioned to take advantage of all things befalling its second largest money maker.

While many will argue the merits of “factory meat,” it doesn’t change the fact that meat eating for most Americans involves no free ranges.

Rather, it’s factory farming that “brings home the bacon” for most families and profits for Tyson Foods, Inc. (NYSE:TSN).

Pigs are dying

Porcine epidemic diarrhea virus may well be a blessing for Tyson as pigs across the country fall in its wake that’s expected to peak this summer. Tyson Foods, Inc. (NYSE:TSN) has, accordingly, shifted the flow of animals among its plant and adjusted factory hours to meet lowered supplies of the animal.

Tyson Chief Executive Donnie Smith discussed the issue today during Tyson’s quarterly earnings call. “The big ‘if’ for us is what’s going to happen with pork,” he said. Smith reiterated that pork will “perform well” as the company waits out the virus.

At least 5 million pigs have been killed by the virus that has struck hog farms in roughly 30 states. Smith, in his call, foresaw rising meat prices for a fourth consecutive year. Over the last quarter, pork and beef prices have risen over 5% and Tyson Foods, Inc. (NYSE:TSN) has raised its sales volume by 13% and 11% respectively.

For those that “dig on swine,” there is no danger posed by the virus. Rather, it only affects young pigs and poses no threat to human health. The USDA in an effort to stem the spread of the virus has required heightened reporting of breakout incidents.

Tyson earnings mixed

“We’re pretty confident that between June and probably dipping the deepest in the [August-September] period and then recovering in October, is the right way to plan our business,” Mr. Smith said, referring to Tyson’s hog business.

Tyson Foods, Inc. (NYSE:TSN) reported revenue for the quarter of $9.03 billion and a profit of $213 million. Those numbers represent a big jump from year-over-year reporting of $95 million or $0.26 EPS versus this quarter’s $0.60 per share.

The polled Reuters consensus was looking for earnings of $0.63 per share and revenue of $8.84 billion.



About the Author

Brendan Byrne
While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. To contact Brendan or give him an exclusive, please contact him at theflask@gmail.com