Despite financial improvement in the chicken segment, Tyson Foods is expected to report a decline in net income and a small gain in revenue when it reports fiscal third-quarter earnings on Aug. 4.
Market consensus calls for net income of 79 cents per share, down 9.2% from the year-ago period. Net Income is expected at $281 million, down 17% from a year ago. Revenue is forecast at $13.56 billion, up 1.52% year over year.
The consensus estimate among analysts have declined 3.5% over the past 30 days as beef segment losses widened and oversupplies of breast meat reduced chicken prices. For the full year, analysts expect Tyson Foods to report earnings per share of $3.83, up 23.6% from the $3.10 reported in 2024.
Tyson’s chicken segment is forecast to report operating income around $318 million, up 3.58% from the same period last year. Stephens Inc. reports the chicken processing margin averaged 38 cents per pound in the quarter, which was 6 cents higher than the year-ago. Margins benefited from strong demand and lower grain costs relative to the year-ago period. Also, Tyson’s chicken products have a higher margin than the industry average due to the trimming, flavoring and deboning of most of its retail chicken products.
Stephens also warned that the industry has oversupplied the breast meat market due to favorable margins, which reduced market prices in recent weeks as the industry also moves into its typical seasonal downturn through the next quarter. Tyson’s operating margin in chicken is expected to be 7.3%. Chicken sales in the quarter are forecast at $4.103 billion, up 0.7% year over year.
More red ink is expected for Tyson’s beef segment with quarterly operating losses estimated to be around $157 million, compared to losses of $67 million a year ago. Stephens said beef processing margins averaged 11 cents a head in the quarter, down 99.9% year over year. Tyson’s beef sales are forecast at $5.504 billion, up 5% from a year ago.
Tyson’s pork segment is expected to report operating income of $55 million, better than the $22 million it posted a year ago. Average packer margin for the quarter was $21.73 per head, flat compared with a year ago. Tyson’s pork operating margin is expected at 3.7%, up from 1.5% a year ago. Pork sales are forecast to be $1.494 billion, up 1% year over year.
Prepared Foods is expected to report an impressive operating margin of 10.3%, up from 8.3% a year ago. Sales are expected to total $2.419 billion, down slightly from a year ago. Operating income is forecast at $248 million, up 22% from a year ago.
International sales are expected to total $576 million, down 1%. Operating income is forecast at $28.8 million, up 2.9% from a year ago. The operating margin improved to 5% in the quarter, from 4.8% the prior-year period.
The weakness in beef prompted Stephens to lower its earnings guidance to 81 cents for the quarter, down from 95 cents. The softness in earnings potential also prompted a share target price of $55, down from $61, with a neutral rating by Stephens Inc.
Analysts at Bernstein downgraded shares to a neutral position, citing beef challenges and higher interest costs. Goldman Sachs initiated a “buy” recommendation on June 23, bucking the trend, citing the value in price following the 8% decline in share prices following the second-quarter earnings report.
Shares of Tyson Foods (NYSE: TSN) closed Wednesday at $52.92, down 1.36%. Over the past 52 weeks, Tyson shares have ranged in price from $52.71 to $66.88. Tyson shares have lost 13.12% of their value from a year ago.