Tyson Foods, Inc. (NYSE: TSN) shares have
resumed the selloff it witnessed last Thursday in reaction to a
Washington Post report that dwelt upon a Georgia Department of Agriculture memo.
Reactionary Drops
In reaction to the revelation, shares of major meat companies fell last Thursday:
-
Pilgrim's Pride Corporation (NASDAQ: PPC): (-5.24 percent).
-
Sanderson Farms, Inc. (NASDAQ: SAFM):
(-4.23 percent).
- Tyson Foods: (-3.36 percent).
Tyson Foods, which saw a reprieve last Friday, is being pounded on Monday in reaction to twin
negative tidings.
Catalysts
The most recent catalysts for the incremental downward move have been the company's fourth-quarter results that missed estimates
and its announcement that its CEO Donnie Smith, who has helmed the company since 2009, will leave on December 31, 2016, and will be
replaced by Tom Hayes.
The company's
fourth-quarter adjusted earnings per share rose to $0.96 from $0.83 even as fell to $9.16 billion from $10.51 billion.
Analysts, on average, expected earnings of $1.17 per share on revenues of $9.38 billion.
Among segments, chicken, which accounted for roughly 31 percent, saw sales falling 7 percent, with a 3.5 percent price gain
tempering a 10.1 percent drop in volume.
For 2017, the company said it expects 2017 earnings per share of $4.70 to $4.85, translating to an adjusted earnings per share
growth of 7–10 percent. The current consensus estimate is at $4.98 per share.
The Washington Post memo that led to last Thursday's selloff alleged that prices provided by eight anonymous chicken companies
in the state for calculating the Georgia price estimate called the Georgia Dock may not have given accurate information. The claims
broached the possibility of artificial inflation in chicken prices. Since poultry is one of the flourishing businesses in the
state, an artificial upward lift in prices would mean higher revenues for those companies operating in the state and selling
elsewhere in the United States.
However, Hormel Foods Corp (NYSE: HRL) was
relatively immune to the memo, with the shares of the company rising 0.53 percent on Thursday, but losing a little over 1 percent
last Friday.
At Last Check
- Hormel Foods was down 2 percent to $34.84.
- Pilgrim's Pride, after the two-session slide, was seen recovering by 1.58 percent to $18.60.
- Sanderson Farms was down for a fourth straight session, losing 1.38 percent to $79.92.
- Tyson Foods was slumping 14.68 percent to $57.35 on roughly 5 times its average volume.
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