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Sanderson Farms (SAFM) Queued for Q3 Earnings: Things to Note

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Sanderson Farms, Inc. (SAFM - Free Report) is likely to register improvement in the top and the bottom lines when it reports third-quarter fiscal 2021 numbers on Aug 26. The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $1,304 million, which suggests an increase of 36.3% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for quarterly earnings has move up to $6.73 per share from $6.61 per share in the past 30 days. The projection shows significant growth from earnings of $1.48 per share reported in the year-ago quarter. The poultry processing company’s bottom line has outperformed the Zacks Consensus Estimate by a significant margin in the trailing four quarters, on average. Sanderson Farms delivered an earnings surprise of 83.8% in the last-reported quarter.

Sanderson Farms, Inc. Price and EPS Surprise

Sanderson Farms, Inc. Price and EPS Surprise

Sanderson Farms, Inc. price-eps-surprise | Sanderson Farms, Inc. Quote

Things to Note

Sanderson Farms has been gaining from favorable conditions in the poultry market as well as prudent growth efforts. Improved poultry markets, on the back of favorable customer demand in the foodservice channel as things have been opening up and restaurant traffic is picking up, are an upside. Lately, the company has been witnessing increased export demand. We believe that continuation of the trend is likely to have aided fiscal third-quarter performance. Apart from these, Sanderson Farms is benefiting from its efforts to strengthen its product portfolio and enhance capacity.

However, in its last earnings call, management highlighted that it expects total production during the to-be-reported quarter to be down 0.6% when compared with fiscal 2020’s levels. This can be attributed to reduced target live weight at its Hazlehurst, MS processing plant in a bid to focus better on demands from retail grocery store customers. Apart from this, Sanderson Farms highlighted that it expects supply in comparison to demand for both corn and soybeans crops to remain extremely tight during the back half of fiscal 2021. Elevated feed costs are likely to have put pressure on the company’s performance in the quarter under review.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Sanderson Farms this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Sanderson Farms currently carries a Zacks Rank #3 and has an Earnings ESP of -5.23%.

Some Stocks With Favorable Combinations

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat in the to-be-reported quarter.

The J. M. Smucker Company (SJM - Free Report) currently has an Earnings ESP of +0.46% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Abercrombie & Fitch Co. (ANF - Free Report) currently has an Earnings ESP of +6.14% and a Zacks Rank of 1.

Ulta Beauty Inc. (ULTA - Free Report) currently has an Earnings ESP of +17.59% and a Zacks Rank of 2.