Are Tyson Foods, Inc.’s (NYSE.TSN) Recent Performances Tied to Its Attractive Financial Prospects

Tyson Foods (NYSE.TSN) stock has risen by 3.4% in the past week. Because of its remarkable performance, we decided that we would study the key financial indicators for Tyson Foods (NYSE:TSN) as long-term fundamentals often dictate market outcomes. We decided to focus on the following: Tyson Foods’ ROE is the title of this article.

The ROE (return on equity) is a key indicator of how well a company’s management uses its capital. It is simply another way of saying that it measures the company’s ability to turn shareholder investments into profit.

View our latest analysis for Tyson Foods

How do you calculate return on equity?

The Formula for Return on Equity is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity

So, Tyson Foods ROE is based on the formula above.

16% = US$3.2b ÷ US$20b (Based on the trailing twelve months to October 2022).

The’return,’ or the profit after taxes over the past twelve months, is the amount that was earned. The company earns $0.16 per $1 invested by shareholders.

What is ROE important for earnings growth?

As we have seen, ROE is an effective indicator of a company’s future profits. The company’s decision to invest or retain its profits is what we use to determine a company’s future profitability. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.

Side-by-side comparison of Tyson Foods’ Earnings growth and 16% ROE

Tyson Foods has a respectable ROE. The company’s ROE is also comparable to the industry average 14%. This likely helped Tyson Foods achieve the 8.9% growth over the past five year.

Next, we compared Tyson Foods net income growth to the industry. We found that the company had a similar growth rate to the industry average of 7.7% over the same period.

Stock valuation is heavily influenced by earnings growth. It’s important for an investor to know whether the market has priced in the company’s expected earnings growth (or decline). This helps investors determine whether the stock is well-positioned for a bright future or not. The P/E ratio is a good indicator of earnings growth. It determines the price a stock is willing to sell based on its earnings prospects. You might want to check if Tyson Foods is trading on a high P/E or a low P/EIt is relative to its industry.

Tyson Foods is Tyson Foods making efficient profit?

Tyson Foods maintains 72% of its profits, with a median payout ratio of 28% over three years. This means that Tyson Foods’ dividend is well covered. Furthermore, the company has seen decent growth and it appears like the management is reinvesting their earnings effectively.

Tyson Foods also pays dividends at least ten times a year. This shows that the company is committed sharing its profits with shareholders. The company’s future payout ratio for the next three year is approximately 31%, according to the latest data from our analysts. Tyson Foods’ future ROE is expected to be 14%. This is similar to the current ROE.

Conclusion

We are happy overall with Tyson Foods’ performance. Particularly, we are pleased to see that the company has invested heavily in its business and that it has experienced a large increase in its earnings. However, industry analysts predict that the company’s earnings growth will slow down. Check out this article to learn more about the latest analyst forecasts for the company. visualization of analyst forecasts for the company.

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This article by Simply Wall St has a general nature. Our commentary is based only on historical data and analyst projections. This analysis does not represent a recommendation to purchase or sell any stock and it does not consider your objectives or financial situation. Our goal is to provide you with long-term, focused analysis based on fundamental data. Our analysis may not take into account the most recent price-sensitive company announcements and qualitative material. Simply Wall St holds no position in any of the stocks mentioned.

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