On Nov 19, Zacks Investment Research upgraded Tyson Foods Inc. (TSN) to a Zacks Rank #1 (Strong Buy) following strong fourth quarter fiscal 2014 results announced on November 17.
The company's continuous product innovation and strong momentum in most of its business segments has helped it to post modest gains in earnings and revenues over the past few quarters.
Why the Upgrade?
In the fourth-quarter fiscal 2014, Tyson’s earnings improved 24% from the year-ago numbers and beat the Zacks Consensus Estimate by 13%. Strong sales performance made up for higher input costs. Moreover, Strong momentum in Tyson’s sales has prompted analysts to raise earnings expectations. (Read: Tyson's Q4 Earnings, Revenues Beat on Higher Margins)
The Chicken segment has gained momentum following the shift of demand from high-calorie red meat toward more healthy chicken products. Although sales declined, volume increased in the fourth quarter driven by stronger demand for chicken products and a mix of rendered product sales.
The prepared foods segment has gained a significant 42.8% year over year to $1.3 billion backed by improved demand for Prepared Foods products and incremental volumes as a result of the Hillshire Brands acquisition completed on Aug 28. (Read: Tyson Foods Completes Merger, Hillshire Brands Delisted)
Other Stocks to Consider
Investors interested in the food, meat processing sector can also consider stocks like Pilgrim’s Pride Corp. (PPC) with a Zacks Rank #1 and Sanderson Farms Inc. (SAFM), with a Zacks Rank #2 (Buy). Another food company Post Holdings Inc. (POST) is also worth considering sporting a Zacks Rank #1.
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