Last update on 2024-06-06

Tyson Foods (TSN) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Discover Tyson Foods' (TSN) Piotroski F-Score for 2023, a vital analysis tool revealing the financial standing of the company. Final Score: 4/9.

Short Analysis - Piotroski Score: 4

We're running Tyson Foods (TSN) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

We analyzed Tyson Foods (TSN) using the Piotroski F-Score model, which is a measure to assess a company's financial strength. Of the 9 criteria, Tyson Foods scored 4 out of 9. 1. Profitability: Tyson Foods has a negative net income in 2023, showing a steep decline from the previous year, scoring 0. The company has a positive operating cash flow, giving them 1 point. Unfortunately, their ROA is negative, scoring 0. Their operating cash flow is higher than their net income, which scores another point. 2. Liquidity: Their leverage has slightly decreased, scoring 1 point. The Current Ratio has decreased and is lower than the industry median, scoring 0 points. They also reduced the number of shares outstanding, scoring another point. 3. Operating Efficiency: Gross Margin has worsened, scoring 0 points. Their Asset Turnover slightly decreased, scoring 0 points.

Insights for Value Investors Seeking Stable Income

Based on the analysis, Tyson Foods appears to be struggling in multiple key financial areas, especially profitability and operational efficiency. While they maintain positive cash flow and have managed their debt slightly better, the overall declining trends paint a concerning picture. As an investor, it might be wise to proceed with caution. If you are risk-averse, this stock may not be the best choice at the moment. However, if you're willing to take the risk, thorough further research and monitoring would be required to see if Tyson Foods makes any significant improvements.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Tyson Foods (TSN)

Company has a positive net income?

Net income is the total profit of a company after taxes and expenses. It is crucial for assessing profitability.

The net income of Tyson Foods for the year 2023 stands at a negative $648 million. This represents a troubling dip from a positive $3.24 billion in the previous year, marking a significant decline in profitability. This negative trend raises red flags regarding the company’s financial health. With regard to Net Income, Tyson Foods scores 0 points according to the Piotroski analysis since the net income is negative, underscoring a concerning decline in profitability from previous years.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates a company's ability to generate sufficient positive cash flow to maintain and grow its operations. It reflects the financial health and efficiency of the core business.

For Tyson Foods (TSN), the CFO in 2023 is $1,752,000,000. This positive value suggests that Tyson Foods is currently able to generate adequate cash from its operations to support its business activities. Over the last 20 years, the CFO trend shows fluctuations but generally portrays a rising trend, peaking notably in 2015 and 2020 with values exceeding $2.5 billion and $3.8 billion, respectively. Hence, Tyson Foods earns 1 point for having a positive CFO in 2023, reflecting a good standing in this criterion despite some recent declines.

Return on Assets (ROA) are growing?

Return on Assets (ROA) indicates how efficiently a company generates profit from its assets. An increasing ROA is generally indicative of improved efficiency and profitability.

In the case of Tyson Foods (TSN), the ROA has decreased rather significantly from 0.0886 in 2022 to -0.0177 in 2023. This drastic decline is concerning and does not merit any points according to the Piotroski F-Score criteria. Historically, the last 20 years of operating cash flow trends reveal periods of both strong and weak performance; for instance, Tyson had operating cash flows of $820 million in 2003, peaking at $3.874 billion in 2020. Simultaneously, when compared to the industry median ROA, which hovered around 0.151 to 0.2353 over the same period, Tyson's recent ROA performance is alarming. Therefore, the score is set to 0.

Operating Cashflow are higher than Netincome?

Operating cash flow (OCF) higher than net income indicates that a company has a strong cash-generating ability relative to its reported earnings, reflecting efficient operations and solid liquidity.

In 2023, Tyson Foods reported an operating cash flow of $1.752 billion compared to a net income of -$648 million, meaning the OCF is significantly higher. This yields a positive trend for Tyson Foods under the Piotroski F-Score, adding 1 point. Higher OCF compared to net income can signal strong cash management, especially important given the volatile nature of the food industry. This indicates Tyson's robust cash-generating capabilities despite experiencing a net loss, which alleviates immediate concerns about liquidity.

Liquidity of Tyson Foods (TSN)

Leverage is declining?

Change in Leverage examines the degree to which a company utilizes debt to finance its operations. Evaluating leverage is crucial as it helps in assessing financial stability and risk.

Comparing the leverage of Tyson Foods, Inc. (TSN) which was 0.2135 in 2022 and then slightly decreased to 0.21 in 2023, we can see that leverage decreased. While the change is marginal, it indicates a reduction in debt relative to equity. Historically, looking at a 20-year data chart, leverage has generally fluctuated, spiking in 2009 and 2015, but recently, it shows a downward trend. This reduction in leverage gives us confidence in assessing the company as less exposed to financial risk, affirming a more stable financial structure.

Current Ratio is growing?

The Current Ratio compares a company's current assets to its current liabilities, indicating its ability to pay short-term obligations. A higher ratio is generally positive, as it suggests better liquidity.

Tyson Foods' Current Ratio decreased from 1.8125 in 2022 to 1.3421 in 2023, indicating a decline in its liquidity position. This decrease suggests the company's ability to cover its short-term liabilities with short-term assets has deteriorated. Comparatively, the industry's median current ratio in 2023 is 2.1167. Therefore, Tyson Foods not only saw a reduction in its Current Ratio, but it also underperforms relative to its industry peers. Historical data highlights that Tyson Foods has mostly maintained a stable current ratio around or above the industry median until 2023, making this shift more pronounced and concerning for its short-term financial health.

Number of shares not diluted?

This criterion assesses the change in shares outstanding to evaluate whether the company is issuing new shares or buying back its own shares.

Comparing Tyson Foods' outstanding shares in 2022 (360,000,000) and 2023 (354,000,000), we observe a decrease. Therefore, a point is awarded. This trend indicates a reduction of 6 million shares, suggesting a buyback strategy. Historically, Tyson Foods has fluctuated its shares outstanding, peaking at 413,000,000 in 2015, while gradually decreasing to its current level. Share buybacks can signal management’s confidence in the company's future and its commitment to returning value to shareholders.

Operating of Tyson Foods (TSN)

Cross Margin is growing?

Gross Margin evaluates the percentage of total sales revenue that Tyson Foods retains after incurring the direct costs associated with producing the goods it sells. A higher margin indicates efficient cost control.

For Tyson Foods, the Gross Margin decreased from 0.1251 in 2022 to 0.0498 in 2023, which is a significant drop. This reduction suggests that the company has faced increased production costs or other financial challenges. Over the last 20 years, Tyson's Gross Margin has generally lagged behind the industry median. For instance, the Gross Margin of the industry in 2023 was 0.1674, considerably higher than Tyson's 0.0498, signaling that Tyson's cost efficiencies have been significantly worse compared to its peers. This downward trend may indicate potential operational inefficiencies or rising costs within the company. Therefore, Tyson Foods scores 0 points on this criterion.

Asset Turnover Ratio is growing?

Asset Turnover is a measure of a company's efficiency in using its assets to generate sales. An increasing Asset Turnover ratio indicates improved efficiency.

Comparing 2023 with 2022, Tyson Foods (TSN) saw a slight decrease in Asset Turnover from 1.4572 to 1.4474. This indicates a marginal decline in efficiency. This trend is not favorable as efficient utilization of assets is critical for sustaining profitability. Notably, looking at past data, TSN’s Asset Turnover has generally been on a declining trajectory since 2003 when it was at 2.3539. This long-term downtrend necessitates addressing the factors causing reduced operational efficiency.