Tyson Foods Inc – Risk Profile
- As per GlobalData's proprietary risk methodology, Tyson Foods' overall risk score is 3.30, signifying medium risk
- Country and operational pillars have boosted the overall risk profile of the company
- Company has better liquidity ratios as compared to the industry average, but high debt has impacted the liquidity and cash flow ratios, bringing the overall financial risk score down
Tyson Foods Inc (Tyson Foods) has a satisfactory risk profile and is one of the leading companies based on our proprietary risk assessment of the food sector in the consumer industry. Its country and operational risk scores fare better than the sector's average due to its global customer base and strong operational capabilities. However, high debt is a cause for concern, affecting the financial risk scores.
About the Company
Tyson Foods is a food processor and marketer of chicken, beef, and pork. It is involved in breeding stock, feed production, processing, marketing, and transportation of chicken and related products. The company markets its products under Tyson, Jimmy Dean, Hillshire Farm, Ball Park, Wright, Aidells, ibp, Chairman's Reserve, and State Fair brand names.
Tyson Foods is one of the leaders in the food industry, with reported revenue of $47 billion in 2021, which grew 8.95% over that in 2020. Net income increased 47.84% in 2021 compared to 2020.
Risk Pillars
Our proprietary risk assessment uses a combination of four risk pillars – Country, Industry, Operational, and Financial. Scores are based on a scale of 1 to 5, 1 being the lowest risk and 5 being the highest.
Tyson Foods' overall risk score is at par with the sector's overall score. Companies like Dali Foods Group Co Ltd, Calbee Inc, and Foshan Haitian Flavoring Food Co., Ltd. are the leaders in the sector.
Country Risk: Tyson Foods derives most of its revenue from the US (95.00%), which has resulted in a country risk score of 5.00. Dependence on a limited area could affect the company's operational and financial performance and increases its business risks by exposing it to the economic and geopolitical risks associated with the country, which could affect the demand for its products or disrupt the supply chain and restrict its market share and growth opportunities in the future.
Industry Risk: The company's primary exposure is to the food sector. It generates 100% of the revenue from the food sector, characterized by low-profit margins and weak growth projections compared to other sectors. This has resulted in an average industry score of 3.00.
Operational Risk:
The company's operational score of 3.42 is due to its scale and business positioning. It serves a solid and vast clientele in more than 145 countries. It operates over 20 manufacturing and distribution operations in various states of the US and 42 distribution centers and outside cold storage facilities, two R&D facilities, 12 beef processing facilities, and seven pork processing facilities. However, low profitability and asset turnover remain a concern.
Financial Risk:
The company has a below-average financial risk score of 2.44. The scores are affected due to high debt, which impacted the leverage, interest coverage, and cash flow ratios. The company has a healthy liquidity position, which increases its ability to repay its short-term obligations and puts the company at an advantage, especially while foraying any potential opportunities arising in the market.
About our Methodology:
GlobalData risk scorecard for a sector provides the analysis of various risks a company is vulnerable to. Our risk framework comprises four pillars – country, industry, operational and financial. The country risk for an entity signifies the risk of operating in a particular country. GlobalData's proprietary country risk assessment framework is used to calculate the risk for individual countries. Industry risk is an integral part of risk analysis, and it implies the riskiness and stability of the industries in which a company operates. The operational and financial risk profile comprises a company's risk and return potential based on its key operational and financial metrics. Our scores are based on an average of the latest three fiscal year data.
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