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Tyson Foods Inc Class A TSN

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Morningstar’s Analysis

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No-Moat Tyson’s Beef Segment Is the Star of Q1, but Chicken Investments Curtail Momentum

Analyst Note

| Rebecca Scheuneman, CFA |

One of the biggest challenges in assessing the intrinsic value of no-moat Tyson is gauging the long-term profit potential of its beef segment, which consistently realized 2% operating margins prior to 2016, but has averaged 8% the past four years given strong export demand. The segment proved similarly unpredictable in Tyson’s first fiscal quarter, reporting 13.2% operating margins, compared with our 7% forecast for the segment in fiscal 2021. This strength drove a 150-basis point increase in the quarter’s consolidated operating margin (despite flat organic consolidated sales) to 9.8%, well ahead of our 7.3% estimate for fiscal 2021.

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Company Profile

Business Description

Tyson Foods is the largest U.S. producer of processed chicken and beef. It’s also a large producer of processed pork and protein-based products under the brands Jimmy Dean, Hillshire Farm, Ball Park, Sara Lee, Aidells, State Fair, and Raised & Rooted, to name a few. Tyson sells 86% of its products through various U.S. channels, including retailers (48%), food-service (28%), and other packaged food and industrial companies (10%). In addition, 14% of the company’s revenue comes from exports to Canada, Mexico, Brazil, Europe, China, and Japan.

2200 West Don Tyson Parkway
Springdale, AR, 72762-6999
T +1 479 290-4000
Sector Consumer Defensive
Industry Farm Products
Most Recent Earnings Dec 31, 2020
Fiscal Year End Oct 3, 2021
Stock Type High Yield
Employees 139,000