Sanderson Beats on Q2 Earnings - Analyst Blog

By Zacks Equity Research,

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Sanderson Farms, Inc. ( SAFM ) reported upbeat fiscal second-quarter 2014 (ended Apr 30, 2014) results. Earnings coming in at $2.21 per share exceeded twice the year-ago quarter figure of $1.06. Also, the bottom-line result surpassed the Zacks Consensus Estimate of $1.68 per share by 31.5%.

The improved outcome was driven by higher sales, lower grain costs and higher demand for poultry products.


Net revenues generated were $660.7 million, up 6.4% year over year and above the Zacks Consensus Estimate of $630 million. Revenues were boosted by high demand for poultry products, offset partially by lower market prices.


Sanderson Farms' cost of goods sold declined 1.8% year over year and represented 83.6% of net sales, down from 90.5% in the prior-year quarter. Gross margin was 16.4%, up compared with 9.5% reported in the year-ago quarter.

Selling, general and administrative expenses, as a percentage of total revenue, were at 4.5%, up 130 basis points year over year.

Balance Sheet/Cash Flow

Exiting fiscal second-quarter 2014, Sanderson Farms' cash and cash equivalents were $84.4 million, up 43.5% from $58.8 million in the preceding quarter. Long-term debt, net of current maturities, stood at $10.0 million versus $29.2 million recorded in the previous quarter.

Sanderson Farms generated $80.7 million cash from its operating activities, up from $40.4 million recorded in the year-ago quarter. Capital expenditure surged 128.3% year over year to $66.0 million. Dividend paid totalled $4.6 million.

Sanderson Farms is a $2.0 billion integrated poultry processing company. It engages in the production, processing, marketing and distribution of fresh and frozen chicken products in the U.S.

The company currently sports a Zacks Rank #1 (Strong Buy). Some other companies worth considering in the industry include Pilgrim's Pride Corp. ( PPC ), JBS S.A. ( JBSAY ) and The WhiteWave Foods Co. ( WWAV ). While Pilgrim's Pride sports the same Zacks rank as Sanderson Farms, both JBS and The WhiteWave Foods carry a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: JBSAY , PPC , SAFM , WWAV

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