Sanderson Farms, Inc.
) is benefiting from the record high beef prices as more consumers
switch to chicken. This Zacks Rank #1 (Strong Buy) recently blew by
the Zacks Consensus in the fiscal second quarter by 32% as chicken
Sanderson Farms produces fresh and frozen chicken in the United
Huge Beat in Fiscal Q2
On May 29, Sanderson Farms reported its second quarter results and
beat the Zacks Consensus by 53 cents. Earnings were $2.21 compared
to the consensus of just $1.68.
Sales rose 6.4% to $660.7 million from $621.2 million a year ago.
The company saw a higher gross profit per pound as volumes spiked
on strong demand, there were lower grain costs and chicken prices
Summer Grilling Season is Here
The summer is usually the peak season for chicken demand simply due
to the fact that everyone is grilling out. This year, however, beef
prices are at record highs. Already, Sanderson Farms has seen
consumers rotating into chicken due to cost.
The company said it was "reasonably optimistic" heading into the
summer. Chicken demand is expected to remain strong and supply is
still constrained which should keep prices elevated.
The analysts are bullish on fiscal 2014. Earnings are expected to
rise 36.9% to $7.78 per share this year.
Shares Soar But There's Still Value
Shares have nearly doubled the last 2 years and are now at 5-year
But despite the surge, there's still value. Sanderson Farms trades
with a forward P/E of just 11.6.
It also has a price-to-sales ratio of just 0.8. A P/S ratio under
1.0 usually indicates the company is undervalued.
If you're looking for a food play to cash in on growing chicken
demand, then Sanderson Farms should be on your short list.
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SANDERSON FARMS (SAFM): Free Stock Analysis
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