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Tyson Foods: A Reliable Pick Amidst Coronavirus Uncertainty

Jun. 08, 2020 4:10 PM ETTyson Foods, Inc. (TSN)6 Comments
Beulah Meriam K profile picture
Beulah Meriam K


  • Tyson Foods is seeing retail volumes surge past the foodservice segment to reach ~66% of overall sales, although the increases in the former were insufficient to fully offset declines in the latter.
  • The financial position is strong, further bolstered by a recent term loan agreement for $1.5 billion.
  • The company's production capabilities will be severely tested in the coming months, but it has a great deal of flexibility in addressing the foodservice-to-retail shift in Q3-20 and beyond.

Tyson Foods, Inc. (NYSE:TSN) has had a rougher time than most of its peers, mostly on the back of recent news about more than one coronavirus outbreak at its manufacturing facilities. As the company continues to trade at nearly 30% down on a YTD basis and forward earnings multiple stands at under 15 as of this writing, it's a good time to think about adding to your position at these levels.

Thesis: Tyson Food certainly faces a tough year ahead because of global shutdowns resulting from the general COVID-19 situation as well as specific incidents in at least two of its facilities in the United States. Nevertheless, there are signs that the company will bounce back to pre-COVID-19 levels in terms of revenue growth and profitability, as evidenced by the recent upgrade by Sanford C. Bernstein & Co., LLC.

COVID-19 Situation at Tyson Foods

Early in May 2020, 257 of the total 1,282 employees and contractors at the Tyson Foods poultry facility in Temperanceville, Virginia, were tested positive for COVID-19. Toward the end of May, another 591 team members tested positive for the novel coronavirus at their Storm Lake, Iowa, pork processing facility. The company has released testing results for both facilities, the latter being released on June 2, 2020. TSN is proactively testing and releasing test results for coronavirus across several of its U.S. facilities.

Despite forced shutdowns and idling at several locations, Tyson Foods continues production, albeit at much lower levels. As a result of these production constraints that have affected more than a few of its 40 production locations across the U.S., revenues for the current quarter (Q3-20) are expected to be severely impacted. Nevertheless, Tyson Foods is committed to taking care of its employees, two examples of which are the revision of short-term disability pay to

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This article was written by

Beulah Meriam K profile picture
I do deep-dive analyses into the top companies in multiple segments, including retail, consumer goods and technology.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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