Tyson Foods, Inc. (TSN) stock plummeted 14.49% on Monday. The company’s shares fell on two big news announcements: a new CEO was named and 2017 forecasts. Four main factors of the reports include:
1. 2017 Profits Expected to Fall
Tyson Foods released lower-than-expected forecasts for 2017. The company is the largest meat processor in the country. Earnings per share for the year ending September 2017 are $4.70 – $4.85, missing expectations of $4.98 EPS.
Profits are taking a hit as the company plans to increase expenditures from $700 million to $1 billion for improved worker and food safety, supply chain improvements, and improvements in animal welfare.
2. Tom Hayes Named CEO
The company announced Tom Hayes as CEO due to his track record and the strategic direction of the company. CEO Donnie Smith is highly regarded as the company’s best CEO in history, and the company’s shares have quadrupled since he started his position seven years ago.
Smith is just 56 years old, and his departure is a major factor in the stock slumping on Monday.
Hayes is 51 and the company’s president.
3. Price Fixing Allegations
A class action lawsuit against Tyson and other chicken producers have investors wary. The company is accused of price fixing. The departure of Smith is not related to the lawsuit, according to reports.
4. Fiscal 4th Quarter Results Disappoint
Tyson’s fiscal 4th quarter results disappointed. The company’s sales fell 12.8% year-over-year to $9.16 billion. Lower beef and value-added chicken product costs were to blame for the poor results.
Analysts’ forecasts for revenue were $9.38 billion.
The company’s EPS, excluding items, hit $0.96. Analyst estimates averaged $1.17 per share in earnings. Lower feed and livestock costs helped net income reach $391 million, up 51.6% on the quarter.
Tyson’s stock for the year was up 26.3% at Friday’s close. The company’s stock is up 0.17% in premarket trade on Tuesday.
