What happened

Shares of Tyson Foods (TSN 1.83%) slumped as much as 10.1% on Monday, making it a tough start to the week for the meat processing company. The owner of Tyson, Jimmy Dean, and Hillshire Farms brands reported second-quarter earnings below expectations. As of 3:04 p.m. ET, the stock is down 8.5% today.

So what

Before the market opened on Aug. 8, Tyson Foods reported its Q2 earnings for the three months ending in June. Revenue was up to $13.5 billion compared to $12.48 billion a year ago, beating Wall Street estimates of $13.25 billion. Adjusted earnings per share (EPS) were $1.94, missing the pre-earnings estimate of $1.98. This adjusted EPS miss is likely why Tyson Foods stock is down today.

Tyson is benefiting from rising meat prices around the world, which are driving revenue growth. But investors were likely concerned to see the company's volumes drop in Q2, down 1.9% year over year. Management said this is due to labor constraints at its processing facilities, which are below pre-pandemic levels and prevented the company from fulfilling all of its demand this quarter.

We also see the negative impacts inflation can have on a commodity producer like Tyson Foods. Even though meat prices are soaring, helping Tyson's revenue growth, its adjusted EPS was down 28% in the quarter due to rising input and labor costs. This is not a good recipe for building long-term value for shareholders. 

Now what

Even with the recent price drop, Tyson Foods stock is up 14% over the past year and trades at a market cap of $28.7 billion. With $2.2 billion in free cash flow generated in the last twelve months, that puts the stock at a price-to-free cash flow (P/FCF) ratio of just 13. This is below the market average but not generally dirt cheap, especially with inconsistent earnings growth.

If you believe in the long-term growth of Tyson's business, now could be a good time to buy the stock. But if not, it's best to stay away and avoid "buying the dip" on this food processor.