Tyson Foods playing chicken with trade tariffs

Tyson Foods ($TSN) today downgraded it’s outlook for FY2018 after being quite optimistic on the year. Looking at a company press release, they cite a few major reasons why they are downgrading guidance from $6.55-$6.70 yearly EPS to $5.70-$6.00 per share. Cited reasons why Tyson Foods feels this way include:

  • “Uncertainty in trade policies and increased tariffs negatively impacting domestic and export prices”
  • Volatile commodities markets
  • Slowing domestic chicken demand
  • Margins in pork slimming due to off kilter supply and demand
  • Less positive tax reform benefit

Why you should take a bite out of Tyson Foods now

Trade tariffs and commodities markets are no joke, but Tyson Foods can benefit from the micro-level industries that are popping up, mainly because this is their wheelhouse.

Frozen meal sales are forecast to grow to $47 billion annually by 2026, and no signs of slowing down. The majority of those frozen sales are chicken, and something the industry might not be fully realizing from a top line perspective is the addition of home meal kits, a la Blue Apron ($APRN) and Hello Fresh. (Let’s also not forget that on the drop of a dime, Whole Foods can start the meal delivery kits as well).

Tyson Foods could experience significant growth within the frozen and meal kit industries, and cutting out traditional distributors and going direct to consumer, more than mitigating any potential damage from tariffs and trade wars.

Unfreezing profit potential in Tyson Foods

Looking at Tyson Foods and public financial statements, and comparing EBITDA multiples of competitors like Hormel ($HRL), Kellog Company ($K), Dean Foods Company ($DF), and General Mills ($GIS), Tyson still has quite a bit of growth. Taking a peek under the hoods of all of these companies, we can see that Tyson can trade a bit higher at an average 11.3x multiple, and we can put a $91.89 price target on the company, representing a healthy 45% upside.

The company also pays a semi-decent dividend, at 2.04%, even at a modest 12.8% payout ratio.

So kick back, relax, grab a TV tray, and burn the roof of your mouth on a brownie because Tyson is set to be delicious soon.

*** SPECIAL ALERT — June 27, 2020 — THREE of this Year’s Motley Fool Stock Picks Have Already Doubled! ****

We have been tracking ALL of the Motley Fool stock picks since January 2016. That’s 4+ years, 54 months and 108 stock picks. As of Friday, June 26th 3 of their 12 2020 stocks picks have already doubled (TSLA, ZM, SHOP). In addition, 4 of their 2019, 8 of their 2018, 7 of their 2016 and 10 of their 2016 picks have also doubled. Best of all, over these 54 months, the average stock pick is up 111%. That beats the SP500 by an average of 87%. And that’s even accounting for all of this COVID mess that has wreaked havoc on some stocks but presented opportunity for other stocks. THAT is how the Fool does so well!

  • Shopify (SHOP) – April 2, 2020 pick and it is already up 163%
  • Zoom Video (ZM) – March 19, 2020 pick and it is already up 107%
  • DexCom (DXCM) picked Feb 20, 2020 right before the market crashed and it is still up 26%
  • Tesla (TSLA) picked January 2, 2020 before the crash and it is up 123% compared to the SP500 -7% so it is ahead of the market by 130%
  • HubSpot (HUBS) picked December 5, 2019 and it is up 46%
  • Netflix (NFLX) picked November 21, 2019 and it is up 42%
  • Trade Desk (TTD) picked November 11, 2019 and up 111%
  • Zoom Video originally picked Oct 3 and it is up 234%
  • SolarEdge (SEDG) picked September 19, 2019 and it is up 44%

Now, no one can guarantee that their next picks will be as strong, but our 4.5 years of experience has been super-profitable. They also claim that since inception, their average pick is up 424% and now we believe them. You sure don’t want to risk missing out. Many analysts are saying that we have passed the bottom of this COVID crisis and stocks will recover quickly. So make sure you have the best stocks in your portfolio.

Normally the Fool service is priced at $199 per year but they are currently offering it for just $99/year if you click this link

CLICK HERE to get The Motley Fool’s Stock Picks for just $99 per Year! 



Robinhood was the first brokerage site to NOT charge commissions when they opened in 2013. They just past 10,000,000 accounts and to celebrate they are offering up to $1,000 in free stock when you open a new account.

Here’s the details: You must click on a special promo link to open your new Robinhood account. Then when you fund your account with at least $10, you will receive one stock valued between $5 and $500. Then, you will get a link to share with your friends. Every time one of your friends opens an account, you will receive another free stock valued between $5 and $500. Click here to learn more about this Special Robinhood offer.

Claim your free stock NOW

(before it’s too late)

Leave a Reply

Your email address will not be published. Required fields are marked *