NEW YORK (TheStreet) -- Shares of Tyson Foods Inc. (TSN) are higher by 2.48% to $38.81 in mid-afternoon trading on Wednesday after the food production company announced a definitive merger agreement with Hillshire Brands Co. (HSH) valued at $8.55 billion, or $63 per share.
Tyson first made an offer for Hillshire, a food products manufacturer, and marketer, in June and will also pay $163 million to dissolve a merger deal between Hillshire and Pinnacle Foods Inc. (PF).
The deal is expected to close on September 27, the last day of Tyson's fiscal year.
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"We rate TYSON FOODS INC (TSN) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TSN's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 7.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 36.36% and other important driving factors, this stock has surged by 47.29% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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.
- TYSON FOODS INC has improved earnings per share by 36.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TYSON FOODS INC increased its bottom line by earning $2.32 versus $1.68 in the prior year. This year, the market expects an improvement in earnings ($2.90 versus $2.32).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 124.2% when compared to the same quarter one year prior, rising from $95.00 million to $213.00 million.
- You can view the full analysis from the report here: TSN Ratings Report