NEW YORK (TheStreet) -- Tyson Foods (TSN) shares are up 3.3% to $42.04 in early market trading on Friday after the chicken, beef and pork food distributor was added to Goldman Sachs' "conviction buy" list earlier today.
The firm believes that the company's full value has not been realized by the market citing its acquisition of rival Hillshire Farms in late August as the reason for its upgraded outlook.
The merged companies expect to see over $40 billion in annual revenue with synergy savings expected to go from $225 million in fiscal 2015 to more than $500 million by 2017.
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TheStreet Ratings team rates TYSON FOODS INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate TYSON FOODS INC (TSN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, solid stock price performance and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 1.8%. Since the same quarter one year prior, revenues rose by 13.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, TSN's share price has jumped by 32.75%, exceeding the performance of the broader market during that same time frame. 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.
- Net operating cash flow has increased to $635.00 million or 17.15% when compared to the same quarter last year. Despite an increase in cash flow, TYSON FOODS INC's cash flow growth rate is still lower than the industry average growth rate of 32.58%.
- TYSON FOODS INC's earnings per share declined by 50.0% 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 increased its bottom line by earning $2.40 versus $2.32 in the prior year. This year, the market expects an improvement in earnings ($3.40 versus $2.40).
- You can view the full analysis from the report here: TSN Ratings Report