Tyson Still Hard To Digest

Not all food stocks are equal. Companies like Kraft (NYSE:KFT) and Kellogg (NYSE:K) offer a certain level of stability because of their brand value and extensive product offerings, but meat producers like Tyson (NYSE:TSN) do not. With Tyson there are constant worries about oversupply, feed costs and export markets - issues that just by and large do not figure into the packaged goods companies. This June quarter is a good microcosm of that - although Tyson did deliver a solid result, worries about the next quarter are likely to keep a lid on the stock. 

The Quarter That Was
Tyson's revenue beat the average estimate by nearly $200 million, as it grew almost 12% to $7.4 billion. While the company's pork business was the growth leader (up 49% to $1.2 billion), the overall leader in terms of scale was once again the beef business, which grew more than 15% to $3.1 billion.

Profitability was quite a bit better this quarter, as gross profits jumped about 60% from the year-ago level. Tyson managed to maintain this leverage throughout the operating structure, leading to overall operating income growth of almost 84%. On a segment basis, the beef business was a standout - more than doubling to $176 million, while poultry operating profits climbed 30% to $186 million. (For more, see The Bottom Line On Margins.)
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