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Sanderson Farms (SAFM) to Post Q2 Earnings: Key Takeaways

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Sanderson Farms, Inc. (SAFM - Free Report) is likely to register a decline in the bottom line in second-quarter fiscal 2019. Notably, this Mississippi-based company missed the Zacks Consensus Estimate in three of the trailing four quarters.

The Zacks Consensus Estimate for fiscal second-quarter earnings is currently pegged at $1.77, down 3.8% from $1.84 reported in the year-ago period. However, we note that the Zacks Consensus Estimate has gone up by 24 cents in the past seven days. The Zacks Consensus Estimate for revenues is pegged at $849.8 million, up about 4.5% from the year-ago quarter’s reported figure.

Let’s see what awaits this quarterly release.

Sanderson Farms, Inc. Price and EPS Surprise

What’s Influencing the Stock?

Sanderson Farms is on track with its efforts to boost growth. In this regard, the company is focusing on operations in its Tyler plant that opened in February. Further, St. Paul’s plant has already reached full production. We expect contributions from these plants to have a positive impact on the company’s performance in the quarter to be reported. .

Moving on, the chill pack products continue to boost its performance. Also, the company sees healthy demand for corn and soybean, along with tray pack products. Such upsides may contribute to Sanderson Farms’ second-quarter top line to some extent.

Further, the company anticipates an increase in processed meat production in the to-be-reported quarter. Notably, the quarter is expected to witness production of nearly 1.094 billion pounds of processed meat compared with 1.092 billion pounds processed in the year-ago quarter.

However, Sanderson Farms has been reeling under elevated SG&A costs over the last few quarters. The company expects SG&A costs to be $50 million for second-quarter fiscal 2019. This is likely to dent bottom-line performance.

What the Zacks Model Unveils

Our proven model does not conclusively show that Sanderson Farms is likely to beat earnings estimates in the quarter to be reported. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Sanderson Farms has a Zacks Rank #1, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Walmart (WMT - Free Report) has an Earnings ESP of +3.92% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corporation (TGT - Free Report) has an Earnings ESP of +0.70% and a Zacks Rank #2.

Costco Wholesale Corporation (COST - Free Report) has an Earnings ESP of +1.65% and a Zacks Rank #3.

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