Is Tyson Now the Lazarus of the Meat Industry?

Or is there a more logical explanation?


We’ll start up the “Doubting Thomas” Machine in a second, but let’s first acknowledge (and stick with the biblical analogy) that Tyson Foods Inc. seems to have rolled away the metaphorical stone at the mouth of the metaphorical tomb in which they seemed to be ensconced after last year's dismal earnings reports.


2009 was a historically tough year for a company that has been around for more than a hundred of them since their founding in 1896. The Arkansas-based food giant reported a $215 million loss in their operating income at the close of last year’s business with profit margins on their beef business alone running at a loss of 3.2%


But, as The Times reported last week, it looks like Tyson is bouncing back.


Big time.


This year’s final quarter earnings almost look like that of a different company altogether with a reported operating income of roughly $1.5 billion dollars, a $1.77 billion turnaround in one year.


That’s some year.


But, returning to our Lazarus metaphor, the miraculous mending of Tyson’s finances might be not so divine as it is an actuarial inevitability brought about by external market forces.


One salient piece of info from Tyson’s 2010 Q4 earnings report (we read them so you don’t have to) is the performance of the company’s beef business. As we said earlier, that same sector of their revenue stream accounted for a loss of nearly $346 million during Q4 2009. 


In Q4 2010 beef accounted for $542 million in profit for Tyson, a 4.6% gain in profits on their margins.


And if you follow us here at “The Biz,” you know that this is not too surprising (remember?) as beef prices are spiking like a 19^th century fever patient.


So is Tyson really a company that has been rewarded with a second lease on life for its good values and strong belief in the American dream?


Or is it a company that’s getting a profit vacation from an unnatural bubble in beef prices brought about by grain shortages in lands far, far away?


We hesitate to make a call either way as we’re merely humble editors of a blog and not analysts at a commodities brokerage, but we think that Tyson is worth a look for investors.


But make sure it’s a long, lingering one.