Earnings Preview For Tyson Foods (TSN, PPC)

Tyson Foods TSN is expected to announce its Q1 earnings results on Monday, May 9. Analysts are predicting earnings per share will be down 8.7% year-over-year, falling from $0.46 to $0.43. In the last 30 days, consensus estimate was upgraded by $0.01. Revenues are projected to grow by 8.7% to $7.52 billion. Tyson Foods is a meat protein and food production company. It produces, distributes and markets chicken, beef, pork, prepared foods and related allied products. Looking ahead, revenues will grow at a higher pace in the rest of the year. In Q2, analysts expect revenues to rise to $8.05 billion, an increase of 8.3% on a yearly basis. For the whole year, revenues should reach $31.01 billion, 9.1% higher than a year ago. The growing revenues will not be enough to ensure an increase in earnings per share, however. In the next quarter, earnings per share is expected to be 29.9% lower than a year ago, falling from $0.67 to $0.47. For the whole year, earnings per share should stand at $2.03, a fall of 7.3% year-over-year. Meat companies have been hit hard by rising prices of oil and animal feed. Pilgrim's Pride PPC, one of Tyson's arch rivals, had a very bad Q1, after reporting losses of $0.56 per share, far beyond the consensus estimate of a $0.22 loss. Pilgrim's intends to get back to profit making by slashing costs and raising prices. Investors will be watching closely to see if Tyson can avoid a slump similar to Pilgrim's and if it will need to start raising prices to cope with the rising costs as well. Tyson's performance will probably be affected by recent superstorm in the US. In Alabama alone, it killed an estimated three million chickens. The Mother Nature is not a bringer of bad news only, however. Tyson's beef exports to Japan are on the rise after Japan's meat production suffered from the effects of tsunami and earthquake. As a result, any losses from tornados in the US will probably be offset by gains in the Japanese market. Rating agencies are generally optimistic on Tyson's long-term future. At the moment, nine rating agencies have a Buy or Strong Buy on its hares, against eight agencies with a Hold rating. Investors might be encouraged by Tyson's recent record of beating market expectations. In the last year, Tyson outperformed in all four quarters and by as much as 35.3%. In yesterday's trading, Tyson lost 0.77% of its value to close the day at $19.22. In the last three months, its shares gained 3.56%, however.