Street Calls of the Week
Investing.com -- Moody’s Ratings has affirmed Tyson Foods, Inc.’s Baa2 senior unsecured credit facility and bond ratings while revising the outlook to stable from negative, citing substantial improvement in earnings and credit metrics.
The ratings agency noted that Tyson’s adjusted EBITDA increased by 40% from $2.5 billion for the 12-month period ended September 30, 2023, to $3.4 billion for the 12 months ended June 28, 2025. This growth drove a significant decline in Moody’s-adjusted debt/EBITDA ratio, which improved to 2.9x from 4.1x over the same period.
The rebound was primarily led by the poultry segment, which accounted for 30% of sales in the latest 12-month period. Tyson also saw earnings growth in its prepared foods segment and improvements in the pork segment, which helped offset continued operating losses in the beef segment.
Moody’s also affirmed Tyson’s Prime-2 commercial paper rating. The stable outlook reflects Moody’s expectation that Tyson’s poultry and prepared foods segments will maintain current profitability levels, the company will manage costs aggressively, and debt-to-EBITDA leverage will fall below 2.75x in the next 12 months.
The company has made progress reducing its net debt-to-EBITDA ratio to 2.1x as of June 2025, moving closer to its target of less than 2x. Moody’s anticipates Tyson will remain focused on reducing leverage over the next year.
Tyson maintains very good liquidity with an undrawn $2.5 billion revolving credit facility expiring in April 2030, $1.5 billion in cash as of June 28, 2025, and projected free cash flow of approximately $750 million in the next 12 months.
The company’s nearest significant debt maturity is $800 million of 4.0% senior unsecured notes due in March 2026, which Moody’s believes Tyson has ample resources to fund.
Moody’s noted that the beef segment will likely remain weak for the next 12-18 months as cattle farmers retain heifers to rebuild herd sizes, potentially further depressing Tyson’s beef operating margins due to tighter cattle supplies.
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