Shares Of Sanderson Farms Rise After 3Q Beat

MILWAUKEE (AP) — Shares of Sanderson Farms Inc. ticked higher on Wednesday, a day after the chicken producer's third-quarter results beat expectations as it benefited from lower ingredient costs and improving profit margins.

Its stock gained $1.05, or 2.5 percent, to $42.68 in morning trading, having earlier advanced as much as 3.8 percent to $43.21.

The company said Tuesday it earned $43 million, or $2.09 per share, in the three months ended July 31, trumping Wall Street's target by 28 cents per share, according to Thomson Reuters.

BMO Capital Markets analyst Kenneth Zaslow said the company's margins were the best it has seen in several years and were due to stronger prices for wings, "ongoing stellar operating efficiencies" and a smaller volume drop than had been expected.

He told clients in a note Wednesday this bodes well for the future, and he raised his estimates for the Laurel, Miss.-based company, which he said "remains best in breed" of its peers. Zaslow said he expects that supply cuts, lower ingredient costs and the company's focus on growing volume will help earnings in fiscal 2010.