Tyson Foods (Tyson Foods (TSN)) shares got a boost Monday after the meat giant served up second-quarter results that beat Wall Street's expectations. The headline numbers were solid enough, but the real story is in the mix: chicken and prepared foods are carrying the load while beef continues to drag.

Earnings Snapshot

Sales hit $13.653 billion, up 4.4% from a year ago and just above the consensus estimate of $13.611 billion. If you strip out a $343 million legal contingency accrual from the prior year, the underlying growth was a more modest 1.8%. Adjusted earnings came in at 87 cents per share, down 5% year-over-year but ahead of the 78 cents analysts were looking for.

Adjusted operating income was $497 million, down 3%, and the adjusted operating margin narrowed to 3.6% from 3.8%. Not terrible, but not great either.

Segment Performance

The beef segment continues to be the problem child. Sales edged up to $5.205 billion from $5.196 billion, but that was entirely due to pricing gains of 11.5% — volume actually dropped 13.1%. The segment reported an operating loss of $240 million and an adjusted operating loss of $202 million. That's a lot of red ink.

Pork, on the other hand, had a nice quarter. Sales rose to $1.579 billion from $1.244 billion, and operating income was $41 million. Not huge, but a solid turnaround from recent quarters.

Chicken was the star. Sales increased to $4.286 billion from $4.141 billion, and segment operating income was $505 million (adjusted: $523 million). That's a healthy margin and a key driver of the overall results.

Prepared Foods also delivered. Sales climbed to $2.511 billion from $2.396 billion, with operating income of $348 million (adjusted: $352 million). Think chicken nuggets, frozen meals, and the like — steady demand and good pricing.

International sales were $577 million, up from $566 million, with operating income of $38 million.

Cash Flow and Balance Sheet

Through the first six months, cash from operations was $829 million, and free cash flow was $432 million. The company had $500 million in cash and total liquidity of $3.7 billion as of March 28. Plenty of financial flexibility.

Outlook

For the full fiscal year 2026, Tyson expects sales growth of 2% to 4%. The company raised its adjusted operating income forecast to $2.2 billion to $2.4 billion, which is about $100 million higher at the midpoint. Free cash flow is projected at $1.2 billion to $1.8 billion.

The chicken segment is expected to generate operating income of $1.9 billion to $2.05 billion, up from prior guidance. Beef, however, is still expected to lose $350 million to $500 million due to the ongoing cattle cycle. Management says losses should improve in the second half, but it's still a headwind.

Prepared Foods is forecast to deliver $1.25 billion to $1.35 billion in operating income, and pork is expected to contribute $250 million to $300 million. Capital expenditures will run $700 million to $1 billion.

The USDA expects total U.S. protein production (beef, pork, chicken, turkey) to rise about 1% compared with fiscal 2025, so the overall environment is stable.

TSN Price Action: Tyson shares were up 2.37% at $65.19 on Monday, inching toward their 52-week high of $66.41. The market seems to like the story — chicken and prepared foods are picking up the slack, and the beef losses, while painful, are at least expected to moderate.