Tyson Foods, Inc.
Tyson Foods, Inc. (NYSE: TSN) is a food company, which produces a range of frozen and refrigerated food products. The Company operates a portfolio of products and brands including Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells, ibp, and State Fair.
- Focus on Protein-Packed Brands: The company is focused on higher protein production to cater to the rising demand for protein-packed food. For fiscal 2022, management anticipates sales in the upper end of the $49-$51 billion range. Volumes are expected to rise 2-3% year over year as the company is committed to optimizing its footprint and operating its plants at full capacity.
- Low Margin Business: The company is operating in an intense competitive environment, offering products that aren’t highly unique. Over the past decade the company has never reported never reported net margin in double digit number. And prevailing inflationary pressure on the back of ratcheted crude oil prices could further suppress profit margins in the upcoming quarters.
- Technical Weakness: On daily price chart, TSN shares have moved below its crucial short-term supports of 21-day and 50-day SMAs, a bearish indicator. Moreover, a death cross kind of price pattern is forming on the daily price chart, where short-length 21-day SMA would potentially breach downward 50-day SMA, another bearish indicator. Further USD 87 is very crucial support for the stock, if it falls below USD 87, then it would hit stop-loss of many traders which would lead `of sell-off in the stock.
Tyson Foods carries a rich portfolio of protein-packed brands that are growing fast in the global food market. However, company operates in a highly competitive environment, where profit margin is quite thin. The increasing inflationary pressure could suppress margin of the company which is already operating at a lower margin. Further, technical indicators are showing bearishness in the stock at the current level. However, company fundamentals are decent, and company is a strong player in the global food industry. Hence, we recommend a “Watch” recommendation at the closing price of USD 87.64 as of March 11, 2022.
Technical Price Chart (as on March 11, 2022). Source: REFINTIV, Analysis by Kalkine Group
Note: Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.