Sept. 15--It pays to be chicken.
Tyson Foods Inc., just a quick hop across the state line in Springdale, Ark., has experienced a great year so far. The provider of poultry and other food products most recently reported a third-quarter profit of $249 million, or 68 cents per share, compared with $76 million, or 21 cents per share, the same time last year.
That continues a gaining streak for the company, as earnings for the year so far have reached $517 million compared with $398 million the year before.
Andrew Boyd of Gibraltar Capital Management said the commodities market has been working in favor of the company.
"Corn prices have been historically high for the last year or two, but those prices have come down of late and allowed Tyson to gain higher profit margins."
Additionally, Tyson reported increased demand for its chicken, beef and pork products, even though prices for all three have increased.
It's not just good luck. Boyd said the company has been working to trim costs, and it has built a tight control over its own supplies.
"Their vertical integration gives them more control over the market than their competitors," he said.
Though Tyson has benefited from favorable commodity prices, Boyd said Tyson could be affected if corn and soybean prices unexpectedly move higher and Tyson is forced to pass on the cost to customers.
Tyson Foods Inc.
Address: 2200 Don Tyson
Parkway, Springdale, AR,
Chairman: John Tyson
CEO: Donnie Smith
Symbol (Exchange): TSN (NYSE)
Operation: Poultry and other meats
Robert Evatt 918-581-8447