Consumers around the world are adding more meat to their diets, leading to increased demand for proteins. Growing middle class with rising incomes in emerging markets is leading to a surge in the global appetite for meat. In the US, health conscious consumers are replacing carbohydrates with more animal proteins. Per WSJ, global meat production almost quadrupled over the past 50 years, while the population only slightly more than doubled. Over the next 35 years meat production will have to rise by another two-thirds to satisfy the surging demand.
 
Headquartered in Springdale, Arkansas, Tyson Foods (TSN) is one of the largest food companies in the world. They produce, distribute and market chicken, beef, pork, prepared foods and related products. Approximately 1 in 5 pounds of chicken, beef and pork in the US is produced by Tyson.
 
Their products are sold to grocery retailers and wholesalers, meat distributors, military commissaries, industrial food processing companies, chain restaurants, international export companies and domestic distributors. They own some of the industry leading brands including Tyson, Jimmy Dean, Hillshire farm, Ball Park, State Fair and Aidells.
 
Solid Quarterly Results and Upgraded Guidance

The company reported its Q1 2016 results earlier this month.  Record operating income of $776 million was up 38% over the same quarter last year, while the EPS was $1.15, more than 32% ahead of the Zacks Consensus Estimate of $0.87. Higher consumer spending and low meat prices led to increased profits, more than offsetting the impact of a strong dollar on exports.
 
Their strategy of increased focus on packaged food products appears to be paying off now. They also expect that synergies derived from the integration of Hillshire Brands, acquired in 2014, would continue to drive margin growth during the current fiscal year.
After excellent results, the management upgraded the FY 2016 guidance to a range of $3.85 to $3.95 per share, up from $3.50 to $3.65 per share.

Rising Estimates

Analysts have been raising their estimates for the company after stronger than expected results and improved guidance. Zacks Consensus Estimates for the current and next year are now $3.94 per share and $4.28 per share, up from $3.62 and $4.02 respectively, before the results.

The Bottom Line

According to company research, 54% of consumers are deliberately increasing protein in their diet and as such protein growth has been outpacing total food growth. With their portfolio of leading brands across all major meat protein categories, they are uniquely positioned for growth in the industry.  Their expansion in the faster growing markets outside of the US will also drive growth growing forward.