Exchange traded funds tracking the consumer-staples sector could get a boost to start the week following earnings from components Tyson Foods (NYSE: TSN) and Sysco (NYSE: SYY).
Both firms were out with quarterly results before Monday’s opening bell.
Sysco shares added 4% in premarket after the food-service distributor said its fiscal third-quarter earnings rose from the year-ago period as sales climbed 9.1%.
Hapoalim Securities in a Sysco earnings outlook said earnings growth could be held back by continued inflationary pressures. “We note that [fiscal second-quarter]results were disappointing based both on volume and gross margin weakness. We expect similar headwinds in the near-term,” said the analysts, who have a neutral rating on Sysco shares and a $29 price target.
Also Monday, Tyson said its quarterly profit was unchanged. “We produced record sales for the second quarter on substantially higher sales prices in addition to increased volume,” said the company, which processes beef, chicken and pork products.
“We expect very strong pork margins and favorable feed contracts to largely offset the continued margin pressure facing the chicken industry,” Jefferies analysts wrote in a preview of Tyson earnings. “Stocking with our margin resiliency thesis – pork margins and contract benefits will fade, but slack should be picked up by a turn in chicken prospects in late 2011.”
The stocks are holdings in consumer-staples ETFs such as Rydex S&P 500 Equal Weight Consumer Staples ETF (NYSEArca: RHS).
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