Zacks Investment Research downgraded
Sanderson Farms, Inc.
) to a Zacks Rank #5 (Strong Sell) on Jan 14, 2014.
Why the Downgrade?
Sanderson Farms reported its fourth quarter and fiscal year 2013
(ended Oct 2013) results on Dec 17, 2013. Earnings per share in
the fourth quarter were $1.97, down 15.8% from the Zacks
Consensus Estimate of $2.34.
The company reported a 3.5% year-over-year increase in its
expenses. Cost of sales in the quarter increased 2.0% and
represented 86.0% of total revenue. Selling, general and
administrative expenses, at 4.2% of total revenue, grew 49.3%
year-over-year in the quarter. Income tax expense increased
significantly and stood at $26.0 million.
Spiraling expenses have affected Sanderson Farms' financials
adversely in fiscal 2013. Rising costs need to be controlled
before it delves a major blow to the company.
In the last 30 days, the Zacks Consensus Estimate for Sanderson
Farms has decreased 11.9% to $5.95 for fiscal 2014 (ending Oct
2014). This along with a negative average earnings surprise of
81.0% in the trailing four quarters raises our concern over the
company's performance in the quarters ahead.
Other Stocks to Consider
Sanderson Farms is a $1.7 billion integrated poultry processing
company. The company is engaged in the production, processing,
marketing and distribution of fresh and frozen chicken products.
Some better-ranked stocks in the industry include
Amira Nature Foods Ltd.
Hormel Foods Corp.
The WhiteWave Foods Co.
). All the three companies carry a Zacks Rank #2 (Buy).
AMIRA NATURE FD (ANFI): Free Stock Analysis
HORMEL FOODS CP (HRL): Free Stock Analysis
SANDERSON FARMS (SAFM): Free Stock Analysis
WHITEWAVE FOODS (WWAV): Free Stock Analysis
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