How Will Tyson Foods (TSN) Stock Be Affected by Plant Closures? –

This post was originally published on this site

NEW YORK (TheStreet) — Shares of Tyson Foods (TSNGet Report) fell by 1.42% to $44.46 in intraday trading on Thursday, before the company announced plans, after the closing bell, to close two plants and cut 880 jobs.

The company expects to close operations at a pepperoni plant in Jefferson, Wisconsin as well as a prepared foods facility in Chicago during the second half of the fiscal year ending October 1.

There are about 480 employees at the Chicago plant and about 400 at the Jefferson plant.

“We examined many options before we turned down this road,” said president of North American operations Donnie King in a statement. “This affects the lives of our team members and their families, making it a very difficult decision. But after long and careful consideration, we’ve determined we can better serve our customers by shifting production and equipment to more modern and efficient locations.”

Separately, 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 solid stock price performance, growth in earnings per share, revenue growth, attractive valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • TYSON FOODS INC has improved earnings per share by 13.7% 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 $2.40 versus $2.32 in the prior year. This year, the market expects an improvement in earnings ($3.20 versus $2.40).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.2%. Since the same quarter one year prior, revenues slightly increased by 4.0%. This growth in revenue appears to have trickled down to the company’s bottom line, improving the earnings per share.
  • Net operating cash flow has significantly increased by 210.79% to $864.00 million when compared to the same quarter last year. In addition, TYSON FOODS INC has also vastly surpassed the industry average cash flow growth rate of -23.54%.
  • You can view the full analysis from the report here: TSN
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.