What’s in store?
Prices of raw materials are not expected to decrease in the near future. Thus to avoid the surging expenses of buying hay or corn, many farmers are discarding their herds which will keep their overall cost lower for the coming year. But this means there won’t be enough supply of meat to meet the demand ,which will further increase the price of meat.
For the coming fiscal year Tyson forecast a decline of 1% in its overall protein production. But with the anticipated increase in price, Tyson expects to increase their sales to approximately $35 billion.
The company plans to invest more than $27 million in their Sherman, Texas, Tennessee, and Virginia plants, and has also begun operations at their Jacksonville, Florida plant. All these plants will help Tyson support its key customers and will add to the company’s top line.
Tyson expects to continue to be profitable again in 2013. As I see it, the rising selling price of meat has opened a good opportunity for the company. Though the company will continue to suffer from a decline in production and an increase in cost, rising selling prices will help this company to post positive figures. I think this stock is worth watching.
The article This Large Meat Company is Making Dough originally appeared on Fool.com and is written by Satarupa Bose.
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