This past week Tyson Foods posted better-than-expected second-quarter sales and earnings results due to higher volumes and improved operating margin in the beef, pork, and prepared foods segments. And those operating margins should get a little better this year, thanks to the African swine fever that has wiped out 1 million hogs in China, Europe and Southeast Asia.
“This is an unusual, perhaps unprecedented time of the protein industry,” Tyson Foods, Inc. (NYSE: TSN) CEO Noel White said on Monday’s second-quarter earnings call.
“In my 39 years in the business, I’ve never seen an event that has the potential to change global protein production and consumption patterns as African swine fever does.”
Analysts forecast the loss of some 150 million to 200 million pigs this year, which Tyson said threatens 5 percent of the global protein supply.
Tyson maintained its 2019 EPS guidance of $5.75 to $6.10, which looks conservative and 2020 numbers look even more favorable because o f the African swine fever.
Another initiative Tyson Foods has going on is their plans of launching meat substitutes this Summer. Tyson Foods was actually an investor in Beyond Burger, but sold their 6.5% state during the IPO so they could sell their own branded meat alternative. CEO Noel White told analysts on the quarterly conference call Monday that the plant-based product will launch this summer on a limited basis, with a wider rollout in October and November.
So can Tyson Foods continue to represent for the Consumer Staples, lets go to the charts to find out?
Monthly Chart (Curve Timeframe) – monthly supply is at $83 and monthly demand is at $51.
Weekly Chart (Trend Timeframe) – the trend is up.
Daily Chart (Entry) – price is between daily supply and demand zones. Although there isn’t a trade set-up at the moment, the chart suggests to play the extremes at the daily zones.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.