What happened

Shares of Tyson Foods (TSN -0.03%) were falling today after the world's largest poultry producer posted disappointing results in its second-quarter earnings report and cut its full-year guidance.

As a result, the stock closed down 16.4%.

So what

Tyson, which is also a leading processor of beef and pork and owns brands like Jimmy Dean, Hillshire Farm, and Ball Park, said that revenue in the quarter was flat at $13.1 billion, which was below estimates at $13.62 billion.

Lower prices for beef and pork weighed on results as volume in the quarter rose 3.3%, but that was offset by a 3.2% decline in the average price.

High animal feed and cattle costs are squeezing the company, and Tyson faces difficult comparisons with the pandemic period when disruption from COVID-19 helped lead to higher prices. 

Adjusted operating margin shrunk from 8.9% in the quarter a year ago to 0.5%, and it reported an adjusted per-share loss of $0.04, compared to a per-share profit of $2.29 in the quarter a year ago and much worse than estimates at a per-share profit of $0.80.

CEO Donnie King said, 

While the current protein market is challenging, we have a strong growth strategy in place and are bullish on our long-term outlook. We saw strong performance in our branded foods business and continue to be laser-focused on meeting customer needs and planning the future with them.

Now what

Looking ahead, the company cut its full-year revenue forecast from $55 billion to $57 billion to $53 billion to $54 billion, which implies 1% revenue growth at the midpoint and was worse than the analyst consensus at $55 billion.

The company also cut its bottom-line guidance and called for an adjusted operating margin near 0% in beef, pork, and chicken and an expected adjusted operating margin of 8% to 10%.

One analyst said those margins imply earnings per share (EPS) in the "mid $1.50 range" and 2024 EPS below the analyst consensus.

Tyson stock should eventually recover, and it's already taking steps to cut costs, announcing layoffs in April. However, the sell-off is understandable as the company is clearly being impacted by inflation and lower prices.