What Today's Earnings Beat Means for Sanderson Farms

Fiscal second-quarter earnings did not disappoint for SAFM

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Sanderson Farms, Inc. (NASDAQ:SAFM) is the third largest poultry producer in the United States. SAFM currently operates 12 poultry plants and one processing facility. The company employs over 17,000 workers and works with more than 1,000 independent growers. Sanderson Farms products can be found in major markets throughout the U.S., as well as overseas.

Sanderson Farms early this morning reported fiscal second-quarter earnings that were above analyst estimates at $4.34 earnings per share (EPS). Revenue was in-line with estimates, and sales came in at $1.13 billion, easily topping the anticipated $1.04 billion. SAFM appears to be brushing off its impressive report, however, last seen down 2.3% at $162.78.

Sanderson Farms stock has increased about 26% in price over the past 12 months and is trading up by 50% since its July bottom of $108.57. Additionally, shares of Sanderson Farms stock have grown roughly 30% year-to-date, but is currently down about 8% from its May 12 high of $177.48. Sanderson Farms also has a forward dividend of $1.76 and a dividend yield of 1.06%.

Furthermore, Sanderson Farms stock currently trades at a premium, which is evident by its inflated price-earnings ratio of 48.31. However, SAFM’s forward price-earnings ratio looks a much more attractive at 23.42, although it is still fairly high. The key metric for Sanderson Farms stock will be to keep an eye out for bottom-line growth in the next few quarters. In general, SAFM will want to continue its current shift in momentum which makes tomorrow's earnings report more important than ever.

 

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