With shares of Tyson Foods (NYSE:TSN) trading around $25, is TSN an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s Movement
Tyson Foods engages in the production, distribution, and marketing of chicken, beef, pork, prepared foods, and related allied products worldwide. It operates in four segments: Chicken, Beef, Pork, and Prepared Foods. The Company’s integrated operations consist of breeding stock, contract growers, feed production, processing, further-processing, marketing and transportation of chicken, cattle, hogs, and related allied products, including animal and pet food ingredients. Meat products are seen as essential items to many consumers and companies worldwide. So long as meat products are a dietary staple to many, companies like Tyson Foods will see rising profits due to overall improved economic conditions and population growth.
T = Technicals on the Stock Chart are Strong
Tyson Foods stock recently broken above a price range extending back to 2009. The stock is now trading slightly below all-time high prices and looks to be getting ready to test them. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Tyson Foods is trading above its rising key averages which signal neutral to bullish price action in the near-term.
(Source: Thinkorswim)
Taking a look at the implied volatility (red) and implied volatility skew levels of Tyson Foods options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| Tyson Foods Options | 22.88% | 6% | 8% |
What does this mean? This means that investors or traders are buying a minimal amount of call and put options contracts, as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| June Options | Average | Average |
| July Options | Average | Average |
As of today, there is an average demand from call and put buyers or sellers, neutral over the next two months. To summarize, investors are buying a minimal amount of call and put option contracts and are leaning neutral over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.
E = Earnings Are Increasing Quarter-Over-Quarter
Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Tyson Foods’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Tyson Foods look like and more importantly, how did the markets like these numbers?
| 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | |
| Earnings Growth (Y-O-Y) | -40.91% | 14.29% | 93.06% | -58.82% |
| Revenue Growth (Y-O-Y) | 1.83% | 0.88% | -0.37% | 0.74% |
| Earnings Reaction | -3.32% | 3.07% | 10.9% | -7.98% |
Tyson Foods has seen increasing earnings and revenue figures over most of the last four quarters. From these figures, the markets have generally been satisfied with Tyson Foods’s recent earnings announcements.
P = Average Relative Performance Versus Peers and Sector
How has Tyson Foods stock done relative to its peers, Smithfield Foods (NYSE:SFD), Hormel Foods (NYSE:HRL), Pilgrims Pride (NASDAQ:PPC), and sector?
| Tyson Foods | Smithfield Foods | Hormel Foods | Pilgrims Pride | Sector | |
| Year-to-Date Return | 28.56% | 20.72% | 32.94% | 45.86% | 21.98% |
Tyson Foods has been an average relative performer, year-to-date.
Conclusion
Tyson Foods is a mass provider of chicken, beef, pork, prepared foods, and other related products to a wide range of consumers and businesses worldwide. The stock has recently broken above a three-year range and looks to be getting ready to test all-time high prices. Earnings and revenue figures have been increasing over most of the last four quarters which has kept investors satisfied. Relative to its strong peers and sector, Tyson Foods has been an average year-to-date performer. Look for Tyson Foods stock to continue to OUTPERFORM.
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