It would be easy to assume the sky is falling at Tyson Foods, one of the world's largest chicken producers. The Springdale, Ark., company lost $127 million, or 37 cents a share, for the quarter that ended April 1 as sales dipped 1.7% to $6.25 billion. Avian influenza has sapped the demand for poultry. And bird flu will grab more headlines as the U.S. government announces its plans to deal with the virus if it becomes pandemic.
Chicken isn't the only protein problem for Tyson. Its beef business reported a $188 million operating loss in the quarter. That division has languished since 2003 when a case of mad cow disease was found in the United States. Chief executive John Tyson blamed a worldwide meat glut for the company's anemic quarterly performance.
But Credit Suisse analyst David Nelson says that the chicken market has bottomed out, which should bode well for Tyson's shares (symbol TSN). "The magnitude of the weakness is behind us," Nelson says.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Tyson Foods usually increases chicken production for the summer but won't this season. In fact, the company has cut its supply of chickens by 25%. Tyson executives say cases of bird flu have waned and forecast that poultry demand in Western Europe will improve. Moreover, they expect the reopening of Taiwan to beef imports to buoy that division.
Indeed, the earnings picture is improving. A few weeks ago, analysts, on average, expected Tyson to lose 11 cents a share for the fiscal year that ends September 30. Now, they expect a profit of one cent a share.
That's not much, but it indicates that analysts' perceptions of Tyson's prospects are improving, and that bodes well for the stock, which closed Tuesday at a little under $15 and is about 31% off its mid-2004 high. Nelson expects Tyson to earn $1.20 per share in the fiscal year that ends September 2007, so the stock trades at a modest 13 times that number. Nelson rates the stock "outperform," with a price target of $18.
-- Thomas M. Anderson
-
What Is a Qualified Charitable Distribution (QCD)?Tax Breaks A QCD can lower your tax bill while meeting your charitable giving goals in retirement. Here’s how.
-
Embracing Generative AI for Financial SuccessGenerative AI has the potential to reshape how we approach learning about and managing our personal finances.
-
Fed Sees Fewer Rate Cuts in 2025: What the Experts Are SayingFederal Reserve The Federal Reserve cut interest rates as expected, but the future path of borrowing costs became more opaque.
-
Why Is Warren Buffett Selling So Much Stock?Berkshire Hathaway is dumping equities, hoarding cash and making market participants nervous.
-
Fed Cuts Rates Again: What the Experts Are Saying
Federal Reserve The central bank continued to ease, but a new administration in Washington clouds the outlook for future policy moves.
-
If You'd Put $1,000 Into Google Stock 20 Years Ago, Here's What You'd Have TodayGoogle parent Alphabet has been a market-beating machine for ages.
-
Fed Goes Big With First Rate Cut: What the Experts Are Saying
Federal Reserve A slowing labor market prompted the Fed to start with a jumbo-sized reduction to borrowing costs.
-
Stock Market Today: Stocks Retreat Ahead of Nvidia EarningsMarkets lost ground on light volume Wednesday as traders keyed on AI bellwether Nvidia earnings after the close.
-
Stock Market Today: Stocks Edge Higher With Nvidia Earnings in FocusNvidia stock gained ground ahead of tomorrow's after-the-close earnings event, while Super Micro Computer got hit by a short seller report.
-
Stock Market Today: Dow Hits New Record Closing HighThe Nasdaq Composite and S&P 500 finished in the red as semiconductor stocks struggled.
