NEW YORK (TheStreet) -- Shares of Sanderson Farms Inc. (SAFM) are up 3.81% to $87.66 in pre-market trade after the poultry producer reported second fiscal quarter results and six months ended April 30, 2014.
Net sales for the second quarter of fiscal 2014 were $660.7 million compared with $621.2 million for the same period a year ago. For the quarter, net income was $51.0 million, or $2.21 per share, compared with net income of $24.4 million, or $1.06 per share, for the second quarter of fiscal 2013.
"The results for our second quarter of fiscal 2014 reflect lower grain costs and continued favorable demand for poultry products," said Joe F. Sanderson, Jr., chairman and CEO of Sanderson Farms, Inc.
"Our net sales were 6.4% higher compared with the second quarter of fiscal 2013, reflecting increased volume offset by slightly lower market prices. Demand for chicken remains strong from our retail grocery store customers, and it appears the relatively high prices of competing protein have shifted some consumer demand to chicken. In addition, while customer traffic through food service establishments remains challenged by macroeconomic factors, relatively high priced beef contributed to improving demand and market prices during the quarter for products produced at our food service plants" Sanderson said.
Net sales for the first six months of fiscal 2014 were $1,245.6 million compared with $1,217.0 million for the same period of fiscal 2013. Net income for the first half of the year totaled $79.9 million, or $3.46 per share, compared with net income of $17.4 million, or 76 cents per share, for the first six months of last year.
TheStreet Ratings team rates SANDERSON FARMS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate SANDERSON FARMS INC (SAFM) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 503.22% and other important driving factors, this stock has surged by 28.48% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, SAFM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- SANDERSON FARMS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SANDERSON FARMS INC increased its bottom line by earning $5.67 versus $2.34 in the prior year. This year, the market expects an improvement in earnings ($7.23 versus $5.67).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 515.8% when compared to the same quarter one year prior, rising from -$6.94 million to $28.87 million.
- SAFM's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.32, which illustrates the ability to avoid short-term cash problems.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Food Products industry and the overall market, SANDERSON FARMS INC's return on equity exceeds that of both the industry average and the S&P 500.