Stock Worth Buying: Sanderson Farms - Analyst Blog


Zacks Investment Research upgraded Sanderson Farms, Inc. ( SAFM ) to a Zacks Rank #1 (Strong Buy) on May 6, 2014. Going by the Zacks model, companies holding a Zacks Rank #1 have strong chances of performing better than the broader market.

Why the Upgrade?

Market sentiments seem to be working in favor of Sanderson Farms as denoted by a year-to-date gain of 35.8% in the company's share price. Also, in the last five years, Sanderson Farms' earnings grew nearly 18.2% as against a 14% increase recorded for the industry.

In the last reported quarter, Sanderson Farms' earnings were $1.25 per share, up from a loss of 10 cents per share recorded in the year-ago quarter and also the Zacks Consensus Estimate of earnings of 94 cents. The bottom line performance was driven by lower cost of sales and interest expense that more than offset 1.8% fall in revenues. Gross margin improved 10% year over year.

Strong performance in the past quarters, with a positive average earnings surprise of 12.94%, have made investors hopeful of another quarter of upbeat result from this integrated poultry processing company. Currently, the company has an Earnings ESP of +6.02% for fiscal second quarter 2014 (ended Apr 2014), +4.85% for fiscal 2014 and +9.14% for fiscal 2015.

Sanderson Farms is likely to release its fiscal second quarter 2014 results on May 29, 2014. In the last 60 days, the Zacks Consensus Estimate has gone up by 8.2% to $7.01 for fiscal 2014 and by 14.9% to $5.25 for fiscal 2015.

Other Stocks to Consider

Sanderson Farms has a $1.9 billion market capitalization. Other companies worth considering in the industry include Pilgrim's Pride Corp. ( PPC ), Pinnacle Foods Inc. ( PF ) and The WhiteWave Foods Co. ( WWAV ). While Pilgrim's Pride holds a Zacks Rank #1 (Strong Buy), both Pinnacle Foods and WhiteWave Foods carry a Zacks Rank #2 (Buy).

PINNACLE FOODS (PF): Free Stock Analysis Report

PILGRIMS PRIDE (PPC): Free Stock Analysis Report

SANDERSON FARMS (SAFM): Free Stock Analysis Report

WHITEWAVE FOODS (WWAV): Free Stock Analysis Report

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Zacks Investment Research

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: PF , PPC , SAFM , WWAV

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