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Tyson Foods (TSN +9%) breaks out today after flying past analyst earnings estimates on decent top-line upside in Q4 (Sep). The prominent chicken, beef, and pork processor still projected FY25 revenue growth below analyst expectations, seeing flat to a 1% dip yr/yr, reflecting little material changes in consumer behavior combined with sliding pork prices and uncertainty surrounding cattle herds.

Nevertheless, after such a chaotic year filled with multiple plant shutdowns and significant layoffs, investors are encouraged by TSN's improving volumes and profitability in Q4. The market is also expressing optimism over TSN's adjusted operating income projections for FY25, signaling sustained profitability despite relatively soft revenue growth.

• TSN topped earnings by double-digits for the fourth straight quarter in Q4, expanding its bottom line by nearly 150% yr/yr to $0.92. Adjusted operating income of $512 mln, representing margins of 3.8%, was TSN's best quarterly performance all year, both more than doubling from the year-ago period. Management has aggressively targeted operational efficiencies, closing four chicken processing plants and announcing meaningful workforce reductions during 1H24, helping TSN overcome inflationary costs and an unfavorable product mix.
• Revenue did not grow as substantially as earnings, crawling just 1.6% higher yr/yr, the same as last quarter, to $13.56 bln. TSN's largest Beef business led all segments in the quarter, posting 4.6% sales growth on a 3.7% lift in volumes even though prices edged nearly 1% higher yr/yr. Chicken also grew, recording a 2.3% improvement, primarily fueled by rising prices as volumes turned 0.7% lower. Pork revenue slid by 3.7%, dragged down by a nearly 7% price drop. Prepared Foods saw virtually flat revenue growth due to a 1.4% volume decline.
• On a consolidated basis, volumes inched 0.5% higher, carrying upward momentum from last quarter's +1.1% bump. Supporting TSN's steadily improving volumes compared to a 0.7% contraction during the first half of the year has been a gradual shift among consumers to cook at home. Away-from-home food prices have been rising quicker than at-home prices this year, nudging households away from dining out as frequently.
• Looking ahead, while market mechanics related to cattle supply, as there are no clear signs of sustained herd rebuilding intentions, and pork prices remain dynamic, TSN anticipates similar profitability across the board in FY25. The company anticipates adjusted operating loss to persist for Beef, while targeting adjusted operating income of $0.1-0.2 bln for Pork and $1.0-1.2 bln for Chicken, mirroring the figures from FY24.

TSN capped off a challenging year on a high note, providing much-needed momentum heading into FY25. With TSN's FY25 guidance potentially too conservative due to the several clouds hanging in the distance, the company could end up raising its targets for the year if inflationary pressures continue to ease. As consumers gravitate toward cooking more at home, a more fortified base may be forming, providing TSN a higher jumping-off point for long-term growth.