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Tyson Foods Inc. correlation of stock price financial ratios

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Company: Tyson Foods Inc. - Stock symbol (TSN)

Deliver a 400 to 500 word one page memo on your analysis.

Is there a contemporaneous relationship between current company information and stock price? (That is, is the information reflected in the stock price?)

What happens to the ratio over the last years (2009-2012)? What happens to stock price over the last years?

Interpret the sign ("+" or "-") of the correlation.

List the the correlation from highest to lowest in absolute value.

Do the high correlations make financial sense?

With the attachment, trying to identifying 3 areas close to the number 1 and speak about the effects on those respective areas in a way to provide intelligent responses to the above questions.

Any guidance, suggestions, and assistance would be appreciated to help get started. When you review the ratios, will you suggest where I should focus my attention?

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Solution Summary

Your discussion is 454 words and gives ideas about why the correlations are either not strong or are negative. The spreadsheet show the correlations sorted by absolute value.

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The correlation of Tyson ratios to stock prices during the period 2009-2012 show some strange patterns. For instance, there are five ratios that are strongly related (correlation above .7) but are negatively correlated with stock price. That is, as stock price goes up, the ratios go down. Yes, that's right. Return on equity, return on assets, days in receivables, net profit margin and interest coverage all declined of this three year period but the stock price climbed over this period. Only receivables turnover was positively correlated (with a strong relationship over .7) during this three year period.

Sorting the absolute value of the correlations (see excel tab sorted), shows that the measures that seem to move most in relation to price (strong ...

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Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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