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.