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Bull Of The Day: Sanderson Farms (SAFM)

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Sanderson Farms (SAFM - Free Report) is a Zacks Rank #1 (Strong Buy) and the Bull of the Day. As an Aggressive Growth Stock Strategist here at Zacks, I like names that have a lot of growth potential to them.  SAFM looks almost more like a value play, but that if just for the time being.

Description

Sanderson Farms, Inc. is engaged in the production, processing, marketing and distribution of fresh, frozen and minimally prepared chicken. As a company, Sanderson Farms is committed to adopting a fresh approach in everything that it does. Not only where products are concerned, but companywide as well. Though the company has grown in size, it still adheres to the same hometown values of honesty, integrity and innovation that were established when the Sanderson family founded the company as a small feed, seed and farm supply business.

Earnings History

This is not what I expected to see from a Zacks Rank #1 (Strong Buy) as the company has missed each of the last four reports.  The last two saw negative earnings surprises of 49% and 46%.

Estimate Revisions

I see some crazy moves in estimates which may contribute to the shift in the Zacks Rank.  30 Days ago, the current quarter was looking at a loss of $2.41, but that number was slashed to a loss of $1.82.  

The next quarter was looking at a loss of $0.49 but that flipped to a gain of $0.80.   That is a huge move higher!

Valuation

I know I mentioned that value players might like this, but they will hate the earnings multiple.  I see a 120x forward earnings multiple and 85x trailing number.  The price to book multiple, however, is very reasonable at only 2x.  The price to sales of 0.8x is also very low.

Chart

 

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