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Sanderson's Loss Widens, Rev Beats - Analyst Blog

Posted: 2/26/2013 12:40:00 PM
Referenced Stocks: HRL;HSH;SAFM;TSN

Sanderson Farms Inc. ( SAFM ), a poultry processing company, announced mixed results for the fiscal first quarter 2013. The company reported a loss per share of 31 cents, missing the Zacks Consensus Estimate of a loss per share of 7 cents. Moreover, the results narrowed compared with a loss of 36 cents in the year ago quarter. The results can be attributed to a huge rise in the prices of grains that offset the increase in price of poultry.

Revenue: In the reported quarter, sales inched up 15.1% year over year to $595.8 million, due to growth in both price and volume of poultry. Revenue also surpassed the Zacks Consensus Estimate of $557.0.

Costs/Margins: For the quarter, cost of sales for the quarter increased 14.9% year over year to $584.9 million, due to an increase in the feed cost. Also, operating loss widened to $9.7 million from $9.1 million in the year-ago quarter.

Balance Sheet: Exiting the quarter, Sanderson's cash and cash equivalents stood at $23.8 million against $27.8, reported in the preceding quarter. Long-term debt (net of current portion) was recoded at $150.0, almost flat compared with the quarter ended Oct 31, 2012.

Cash flow: Cash flow from operations was recorded at $8.2 million in the fiscal first quarter 2013; up from cash used in operations of $6.6 million in the year-ago period. Capital expenditures in the reported quarter dropped to $11.5 million from $15.9 million in the year-ago quarter.

Outlook: Sanderson expects the demand of poultry to go up in the coming quarters subject to improvement in the market conditions along with a rise in the costs of the company. Corn and grain costs are likely to go up in the future as well. Also, Sanderson expects its tax rate for the remainder of fiscal 2013 to be roughly 35%.

The stock currently bears a Zacks Rank #1 (Strong Buy). Other stocks worth a look in the industry are Hillshire Brands Company ( HSH ) and Tyson Foods Inc. ( TSN ), both holding a Zacks Rank #1 (Strong Buy), whereas another stock, Hormel Foods Corporation ( HRL ), holds a Zacks Rank #2 (Buy).

HORMEL FOODS CP (HRL): Free Stock Analysis Report

HILLSHIRE BRAND (HSH): Free Stock Analysis Report

SANDERSON FARMS (SAFM): Free Stock Analysis Report

TYSON FOODS A (TSN): Free Stock Analysis Report

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