It has been about a month since the last earnings report for Sanderson Farms . Shares have added about 3.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sanderson Farms due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sanderson Farms Q1 Earnings Beat Estimates, Sales Up
Sanderson Farms posted first-quarter fiscal 2021 results, with the top and the bottom line surpassing the Zacks Consensus Estimate as well as increasing year on year.
However, management informed that the company struggled with pandemic-induced hurdles and higher feed grain prices during the quarter under review. Market prices for boneless breast meat from its facility that process larger birds for food service customers were weak in the first two months of the quarter.
Nevertheless, retail demand remained solid on the back of favorable pricing and product mix. Average prices for tray pack products sold to retail grocery stores increased year over year. Further, prices continue to reflect a healthy supply and demand balance across market.
Q1 in Detail
The company delivered earnings of 42 cents per share. Notably, the company had reported net loss of $1.76 per share in the year-ago quarter. Also, earnings beat the Zacks Consensus Estimate of a loss of 36 cents per share.
Net sales came in at $909.3 million, which surpassed the Zacks Consensus Estimate of $880.1 million. Moreover, the metric increased from $823.1 million posted in the year-ago quarter. Notably, overall market prices for poultry products increased year over year.
The average realized prices of retail tray pack products was up nearly 3.1%, boneless breast meat market prices were nearly 10.5% higher and tender market prices increased by almost 27.4%. Further, market prices of jumbo wing increased nearly 34.3%, while the same for bulk leg quarters declined about 26.4%.
The company’s average feed cost per pound of poultry products processed increased 1.3%. Prices paid for corn and soybean meal was higher by 8.9% and 27.5%, respectively. Soybean meal and corn are part of the company’s primary feed ingredients.
We note that cost of sales increased from $823.5 million to $839.3 million in the reported quarter. Further, SG&A expenses rose to $56.6 million from $49.5 million reported in the year-ago quarter. The company’s operating income came in at $13.4 million against operating loss of $49.9 million reported in the year-ago quarter.
Balance Sheet
Sanderson Farms ended the quarter with cash and cash equivalents of $50.1 million, long-term debt of $55 million and total shareholders’ equity of $1,419.5 million.
Outlook
Going into 2021 planting season, both corn and soybean balance tables show extremely tight supplies. That said, the company is optimistic about its poultry markets in 2021. Also, management expects to see improved demand from food service customers once consumers are more comfortable dining in restaurants and COVID-19 vaccines are widely rolled out. The company anticipates continued favorable demand from retail grocery store customers stemming from higher cook at-home trends. Also, demand from export markets improved since December.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 331.58% due to these changes.
VGM Scores
At this time, Sanderson Farms has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Sanderson Farms has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Sanderson Farms (SAFM) Up 3.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Sanderson Farms . Shares have added about 3.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sanderson Farms due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sanderson Farms Q1 Earnings Beat Estimates, Sales Up
Sanderson Farms posted first-quarter fiscal 2021 results, with the top and the bottom line surpassing the Zacks Consensus Estimate as well as increasing year on year.
However, management informed that the company struggled with pandemic-induced hurdles and higher feed grain prices during the quarter under review. Market prices for boneless breast meat from its facility that process larger birds for food service customers were weak in the first two months of the quarter.
Nevertheless, retail demand remained solid on the back of favorable pricing and product mix. Average prices for tray pack products sold to retail grocery stores increased year over year. Further, prices continue to reflect a healthy supply and demand balance across market.
Q1 in Detail
The company delivered earnings of 42 cents per share. Notably, the company had reported net loss of $1.76 per share in the year-ago quarter. Also, earnings beat the Zacks Consensus Estimate of a loss of 36 cents per share.
Net sales came in at $909.3 million, which surpassed the Zacks Consensus Estimate of $880.1 million. Moreover, the metric increased from $823.1 million posted in the year-ago quarter. Notably, overall market prices for poultry products increased year over year.
The average realized prices of retail tray pack products was up nearly 3.1%, boneless breast meat market prices were nearly 10.5% higher and tender market prices increased by almost 27.4%. Further, market prices of jumbo wing increased nearly 34.3%, while the same for bulk leg quarters declined about 26.4%.
The company’s average feed cost per pound of poultry products processed increased 1.3%. Prices paid for corn and soybean meal was higher by 8.9% and 27.5%, respectively. Soybean meal and corn are part of the company’s primary feed ingredients.
We note that cost of sales increased from $823.5 million to $839.3 million in the reported quarter. Further, SG&A expenses rose to $56.6 million from $49.5 million reported in the year-ago quarter. The company’s operating income came in at $13.4 million against operating loss of $49.9 million reported in the year-ago quarter.
Balance Sheet
Sanderson Farms ended the quarter with cash and cash equivalents of $50.1 million, long-term debt of $55 million and total shareholders’ equity of $1,419.5 million.
Outlook
Going into 2021 planting season, both corn and soybean balance tables show extremely tight supplies. That said, the company is optimistic about its poultry markets in 2021. Also, management expects to see improved demand from food service customers once consumers are more comfortable dining in restaurants and COVID-19 vaccines are widely rolled out. The company anticipates continued favorable demand from retail grocery store customers stemming from higher cook at-home trends. Also, demand from export markets improved since December.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 331.58% due to these changes.
VGM Scores
At this time, Sanderson Farms has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Sanderson Farms has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.