Sanderson Farms Squawks Tasty Earnings
Poultry-processor Sanderson Farms (NASDAQ: SAFM) has given the meat-eating world something to chew on as the company's second quarter earnings were more than applaud-worthy. In not so great news for feathered friends, the chicken industry is on the up and up, quickly becoming the most significant story in proteins of the moment.
SAFM posted net sales of $595 million, up from last year's $479.3 million. Such a substantial increase in numbers can only mean one thing; summer has arrived and barbeque chicken is the guest of honor at many household meals.
Net income for the second quarter was just under $16 million, which widely overshadowed last year's net loss of $49.8 million. Feeling the effects of a complete turnaround, Chief Executive Officer Joe F. Sanderson, Jr. commented on the complete flip flop SAFM has experienced in the past 365 days.
"Our net sales were 24.1 percent higher than during the second quarter of fiscal 2011, reflecting increased production and higher average sales prices of chicken. We sold approximately 10.8 percent more pounds of poultry products during the quarter as a result of increased production at our Kinston, North Carolina facility," Sanderson said.
Poultry purchasing has remained stable at grocery retailers, with casual diners marinating a bit more on the sidelines. However, according to Goldman Sachs a contraction in chicken supplies will drive prices higher over the next few years, making for a positive long-term story.
SAFM is not the only one benefitting from increased meat demand, as Tyson Foods (NYSE: TSN) has seen chicken sales transforming and pork processing conditions strengthening.
"In Beef, TSN proved to be best-in class in the March quarter when compared to its peers. We believe cattle supply is sufficient in TSN's regions for the balance of the FY-end Sep as dictated by on-feed numbers above," Deutsche Bank said in a recent research report.
With pork and chicken margins on the rise, both SAFM and TSN are positioned to report high earnings over the next few quarters. Carnivores rejoice, as coming park picnics and backyard barbecues will continue to taste grilled and savory.
SAFM is currently trading at $52.17, up 4.41% year-to-date, while TSN is trading at $19.26 down 6.69% year-to-date.
Latest Ratings for SAFM
|May 2015||Stephens & Co.||Upgrades||Equal-weight||Overweight|
|Apr 2015||Cleveland Research||Downgrades||Neutral|
|Apr 2015||KeyBanc||Downgrades||Sector Weight||Underweight|
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