Tyson Foods (NYSE: TSN) is the leading player in protein, being the largest US producer and among the best diversified globally. Diversification is the key, with protein a primary consumer category underpinned by high-protein trends. Diversification provides some insulation from volatile commodity price swings, including the impact of this year’s high beef prices. Beef prices are hurting top- and bottom-line results but are insufficient to offset strengths in other categories or derail the long-term opportunity.
The long-term opportunity is sustainable growth, margin, and cash flow. Tyson Foods, like its consumer-staples brethren, is a highly visible and very large company whose growth trajectory is limited, but its cash flow is not. Future growth won’t be robust, but cash flow supports dividends and share buybacks, which underpin a healthy outlook for the stock price.
