We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Sanderson Farms to Gain From Solid Poultry Prices, Costs High
Read MoreHide Full Article
Shares of Sanderson Farms, Inc. rallied 15.6% in the past three months compared with the industry’s growth of 9.7%. The company is gaining from favorable pricing, healthy demand for most poultry products and sturdy export sales.
Notably, robust performance of poultry products drove sales in the third quarter of fiscal 2019. Also, higher average sales prices and increased volumes contributed to the top line. Further, market prices of jumbo wings surged 37.6% from the prior-year quarter’s level, driven by robust seasonal demand. These factors along with strong product base and impressive export sales bode well.
Speaking of export sales, the company boasts an impressive trend. Gross export sales increased 19.6%, 25.8% and 2.7% in fiscal 2018, 2017 and 2016, respectively. Further, the company witnessed healthy export demand during the fiscal third quarter. This led to higher year-over-year average prices for other products at its food service plants.
Hurdles on Sanderson’s Path
However, the company has been grappling with high freight costs for the past few quarters. Rise in costs stemmed from higher shipping costs as well as increased grower pay and escalated costs associated with antimicrobial interventions in the plant. Notably, the metric increased slightly during the third quarter of fiscal 2019 on accounting changes. Further, cost of sales inched up 1.3% during the third quarter. Additionally, non-feed costs related cost of sales increased 8.9% year over year. Such increases in costs exert pressure on the company’s bottom line in the long run.
Moreover, Sanderson Farms witnessed sluggishness in market prices for boneless breast meat produced at plants that process a larger bird for food service customers. This is expected to be consistent in the near term. The company continues to anticipate prices paid for grain in fiscal 2019 to decline $32 million from fiscal 2018 level.
Bottom line
All said, we hope that the Zacks Rank #3 (Hold) company’s growth drivers will help sustain its momentum in the near term.
Beyond Meat (BYND - Free Report) boasts an average positive earnings surprise of 556.3% in the trailing four quarters and carries a Zacks Rank #2.
Nestle (NSRGY - Free Report) has a long-term EPS growth rate of 9% and a Zacks Rank #2.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.6% per year.
Image: Bigstock
Sanderson Farms to Gain From Solid Poultry Prices, Costs High
Shares of Sanderson Farms, Inc. rallied 15.6% in the past three months compared with the industry’s growth of 9.7%. The company is gaining from favorable pricing, healthy demand for most poultry products and sturdy export sales.
Notably, robust performance of poultry products drove sales in the third quarter of fiscal 2019. Also, higher average sales prices and increased volumes contributed to the top line. Further, market prices of jumbo wings surged 37.6% from the prior-year quarter’s level, driven by robust seasonal demand. These factors along with strong product base and impressive export sales bode well.
Speaking of export sales, the company boasts an impressive trend. Gross export sales increased 19.6%, 25.8% and 2.7% in fiscal 2018, 2017 and 2016, respectively. Further, the company witnessed healthy export demand during the fiscal third quarter. This led to higher year-over-year average prices for other products at its food service plants.
Hurdles on Sanderson’s Path
However, the company has been grappling with high freight costs for the past few quarters. Rise in costs stemmed from higher shipping costs as well as increased grower pay and escalated costs associated with antimicrobial interventions in the plant. Notably, the metric increased slightly during the third quarter of fiscal 2019 on accounting changes. Further, cost of sales inched up 1.3% during the third quarter. Additionally, non-feed costs related cost of sales increased 8.9% year over year. Such increases in costs exert pressure on the company’s bottom line in the long run.
Moreover, Sanderson Farms witnessed sluggishness in market prices for boneless breast meat produced at plants that process a larger bird for food service customers. This is expected to be consistent in the near term. The company continues to anticipate prices paid for grain in fiscal 2019 to decline $32 million from fiscal 2018 level.
Bottom line
All said, we hope that the Zacks Rank #3 (Hold) company’s growth drivers will help sustain its momentum in the near term.
Looking for Consumer Staple Stocks? Check These
Danone (DANOY - Free Report) has a long-term earnings per share (EPS) growth rate of 7.9% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Beyond Meat (BYND - Free Report) boasts an average positive earnings surprise of 556.3% in the trailing four quarters and carries a Zacks Rank #2.
Nestle (NSRGY - Free Report) has a long-term EPS growth rate of 9% and a Zacks Rank #2.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.6% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>