Sanderson Farms Scales a 52-Week High - Analyst Blog


Shares of Sanderson Farms, Inc. ( SAFM ) touched a new 52-week high of $95.70 on Jun 2. This new high represents an improvement over $92.79 hit a couple of days earlier.

Sanderson Farms closed at $95.65 on the Jun 2 trading session, reflecting a solid year-to-date return of 38.8%. The trading volume for the session stood at 0.66 million. Upward earnings estimate revisions for 2014 and 2015 indicate a further upward potential for this integrated poultry processing company.

Growth Drivers

Sanderson Farms reported upbeat financial results for second-quarter fiscal 2014 (ended Apr 30, 2014). Earnings came in at $2.21 per share, up more than two-fold from the year-ago quarter's figure of $1.06. Also, the bottom-line results surpassed the Zacks Consensus Estimate of $1.68 per share by 31.5%. The upside was driven by higher sales, lower grain costs and improved demand for poultry products.

Net revenue generated totaled $660.7 million, up 6.4% year over year and above the Zacks Consensus Estimate of $630 million. Revenues were boosted by higher demand for poultry products, partially offset by lower market prices. Cost of goods sold declined 1.8% year over year, leading to 690 basis points year-over-year increase in gross margin.

Encouraging second-quarter results along with an average positive earnings surprise of 15.0% have made investors hopeful of another quarter of impressive results from Sanderson Farms.

Estimate Revisions Show Potency

Over the last seven days, the Zacks Consensus Estimate for Sanderson Farms has increased by 4.9% to $7.99 for fiscal 2014 and 11.3% for fiscal 2015. The consensus estimate for fiscal 2014 reflects a year-over-year hike of 40.7%.

Sanderson Farms currently has a $2.2 billion market capitalization and sports a Zacks Rank #1 (Strong Buy). Some other companies worth considering in the industry include Pilgrim's Pride Corporation ( PPC ), The WhiteWave Foods Company ( WWAV ) and JBS S.A. ( JBSAY ). While Pilgrim's Pride and The WhiteWave Foods Company hold the same Zacks Rank as Sanderson Farms, JBS carries 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 The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: SAFM , PPC , WWAV , JBSAY

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