Morningstar Rating

Stock Research and Analysis

by Ken Perkins

Bulls Say

Tyson boasts leading share in the chicken industry and a large presence in beef and pork markets.
Tyson's scale allows the firm to benefit from cost savings and creates a hurdle for new entrants to overcome. Moreover, a deceleration in the rate of commodity cost inflation and favorable pricing and mix could allow Tyson to leverage its leaner supply chain to expand margins.
With greater comfort in its operating model and balance sheet, Tyson has nearly doubled its dividend over the past two years, and should be able to continue increasing its dividend going forward. Read more 

Bears Say

Many substitute products exist for Tyson's meat products, rendering pricing power and sustained excess returns on invested capital a near-impossible feat.
Tyson's historical profitability and free cash flow generation have been volatile; the company's profitability is extremely vulnerable to volatile input prices.
Meat processing is capital-intensive, requiring significant investments in property, plant, and equipment as well as inventory. When combined with razor-thin profit margins, meat processors' returns on invested capital remain below those of other packaged food firms. Read more 

Management

Donnie Smith has served as president and CEO since November 2009, when he replaced interim president and CEO Leland Tollett. Following the ouster of CEO Dick Bond at the beginning of 2009, the company has undertaken several cost-cutting initiatives   Read more 

Profile

Tyson Foods manufactures and distributes raw and value-added chicken (about 35% of sales in fiscal 2013), beef (40%), pork (15%), and prepared food (10%) products. Tyson's   Read more 

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