Tyson Foods Inc. (NYSE:TSN) has posted lower-than-expected profit and revenue for the third fiscal quarter of 2015, aside from lowering its financial outlook for the full year. Tyson Foods, a leader in the food industry, posted sales of $10.07 billion for the third quarter of fiscal 2015, compared to $9.68 billion reported in the same quarter a year ago. However, the sales did not meet the $10.30 billion figure anticipated by analysts. Meanwhile, the food giant posted a net income of $344 million for the third quarter of this year, up by 33% on the year. In addition to that, Tyson Foods posted a record adjusted earnings per share (EPS) of $0.80, up by 7% on the year, but below the $0.92 a share figure anticipated by analysts. The company’s beef business suffered from export market disruptions, which impacted the third quarter results of Tyson Foods by $84 million. Moreover, the high cattle costs, along with the export issues, made it hard for the company to attain the expected revenue figures. As a result of the turmoil in the beef industry, Tyson Foods lowered its previous fiscal 2015 guidance to a range of $3.10-$3.20 adjusted EPS from the previous $3.30-$3.40. However, Tyson Foods reduced its total net debt by $688 million during the third quarter, which definitely strengthens the company’s balance sheet. Even though the shares of Tyson Foods are currently trading at the same level as at the beginning of the year, the stock plummeted by 9.52% in today’s trading session so far.
Is Tyson Foods Inc. (NYSE:TSN) the right investment to pursue these days? Hedge funds are getting less bullish. The number of bullish hedge fund bets decreased by 3 in recent months. TSN was in 51 hedge funds’ portfolio at the end of the first quarter of 2015. There were 54 hedge funds in our database with TSN holdings at the end of the previous quarter. By the same token, the hedge funds’ total holdings in Tyson Foods decreased to $1.63 billion from $1.91 billion at the end of the previous quarter.
We pay attention to hedge funds’ moves because our research has shown that hedge funds are extremely talented at picking stocks on the long side of their portfolios. It is true that hedge fund investors have been underperforming the market in recent years. However, this was mainly because hedge funds’ short stock picks lost a ton of money during the bull market that started in March 2009. Hedge fund investors also paid an arm and a leg for the services that they received. We have been tracking the performance of hedge funds’ 15 most popular stock picks in real time since the end of August 2012. These stocks have returned 123% since then and outperformed the S&P 500 Index by around 66 percentage points (see more details here). That’s why we believe it is important to pay attention to hedge fund sentiment; we also don’t like paying huge fees.
With all of this in mind, let’s view the fresh action surrounding Tyson Foods Inc. (NYSE:TSN).