Tyson Foods Inc’s (NYSE:TSN) latest earnings announcement in September 2018 confirmed that the business experienced a sizeable tailwind, leading to a high double-digit earnings growth of 70%. Below, I’ve laid out key growth figures on how market analysts perceive Tyson Foods’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Market analysts’ consensus outlook for the coming year seems pessimistic, with earnings reducing by a double-digit -27%. Beyond this, earnings are expected to continue to be below today’s level, with a decline of -23% in 2020, eventually reaching US$2.3b in 2021.
While it is useful to understand the rate of growth year by year relative to today’s figure, it may be more valuable estimating the rate at which the company is moving on average every year. The benefit of this technique is that it ignores near term flucuations and accounts for the overarching direction of Tyson Foods’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -10%. This means, we can assume Tyson Foods will chip away at a rate of -10% every year for the next few years.
For Tyson Foods, there are three relevant aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is TSN worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TSN is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TSN? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.