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Tyson Foods Inc. Stock Buy Recommendation Reiterated (TSN)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Tyson Foods (NYSE: TSN) has been reiterated by TheStreet Ratings as a buy with a ratings score of B+. The company's strengths can be seen in multiple areas, such as its solid stock price performance, revenue growth, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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Highlights from the ratings report include:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 39.30% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TSN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The revenue growth significantly trails the industry average of 42.3%. Since the same quarter one year prior, revenues slightly increased by 0.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.81 is somewhat weak and could be cause for future problems.
  • TYSON FOODS INC has improved earnings per share by 14.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TYSON FOODS INC reported lower earnings of $1.58 versus $1.97 in the prior year. This year, the market expects an improvement in earnings ($2.12 versus $1.58).

Tyson Foods, Inc., together with its subsidiaries, 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. Tyson has a market cap of $6.9 billion and is part of the consumer goods sector and food & beverage industry. The company has a P/E ratio of 15.00, below the S&P 500 P/E ratio of 18.00. Shares are up 26.9% year to date as of the close of trading on Thursday.

You can view the full Tyson Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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