Should You Invest in Tyson Foods?

PHOTO CREDIT: Tyson Foods

OVERVIEW

Tyson Foods Incorporation is one of the world's largest meat processors. They offer beef, pork, and chicken-based products to consumers all over the world. They sell these refrigerated and frozen food products through several brands like Tyson, Jimmy Dean, Hillshire Farms, and more. They sell their products through several major and small grocery stores as well as to other distributors.

Why You Should?

1. Tyson Foods has been investing in its future product line. Millennials prefer to consume plant-based meat products like Beyond Meat and Impossible Foods which are much more eco-friendly. Tyson is investing in its own line of plant-based chicken, pork, and beef products.
2. Tyson offers a wide range of products to its consumers around the world. They offer different kinds of beef, pork, and chicken products (nuggets, raw, bacon, and many more). They offer these products to both individual as well as commercial consumers. Because of this wide product spread, Tyson will always have demand for their products.
3. Tyson Foods products can be found in large and small grocery stores. This wide range of relationships with retailers and consumers will benefit the company’s future growth.
4. The company has seen strong sales which have led to rising revenues over the past couple of financial years. This constant revenue and profit stream will help the company build a stronger balance sheet and support its future growth. In the financial year of 2019, the company reported revenues of around 424 billion and profits of around 2 billion. In the financial year of 2018, the company reported lower revenues at around 40 billion but higher profits at around 3 billion. This decrease in profits was due to lower profits for chicken-based products due to higher operating costs. A plant fire as well as other impacts also resulted in lower profits.

PHOTO CREDIT: Yahoo Finance

Why You Should Not?

1. Tyson Foods has a weak and fragile supply chain. They contract several different farmers to grow their animals for them. These animals will then be taken to one of the few meat processing plants that the company has. If one of these plants is offline, it can lead to a backup and oversupply of animals and lead to massive issues in the future.
2. The COVID-19 Pandemic has shown these supply chain weaknesses and much more. Several plants were shut down because of coronavirus hotspots inside. This led to an oversupply of animals, increasing costs, and a lower supply of products for the company. The closure of restaurants and other venues also led to a decrease in demand for commercial products. This led to a fall in overall sales.
3. The company still faces tons of healthy and growing competition in its industry. Several grocery stores have their own private brands that directly compete with Tyson products. Additionally, other companies like JBS, Smithfield Foods, and Beyond Meat directly compete with the Tyson Foods product line.

MY OPINION

I think that Tyson Foods is a great long-term investment due to an investment in plant-based products and a wide range of other products that can be easily purchased by consumers. However, rising and strong competition as well as having a fragile supply chain during a pandemic might hurt the company’s future growth.