NEW YORK (TheStreet) -- Sanderson Farms (SAFM) shares are down -5.2% to $90.12 on Tuesday after the company reported third quarter earnings of $3.30 per diluted share, 50 cents short of Bloomberg polled analysts' expectations for the quarter.
Click the video below for a closer look at Sanderson Farms latest quarterly results:
The poultry producer reported a 4% rise in revenue over the previous year to $768.4 million, short of analysts' $787.7 million estimates.
The company failed to meet its own production guidance of 815.1 million pounds of processed poultry, processing only $770.4 million pounds during the quarter.
TheStreet Ratings team rates SANDERSON FARMS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate SANDERSON FARMS INC (SAFM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- SAFM's revenue growth has slightly outpaced the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 6.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- SAFM's debt-to-equity ratio is very low at 0.04 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 1.24, 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. When compared to other companies in the Food Products industry and the overall market, SANDERSON FARMS INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Powered by its strong earnings growth of 108.49% and other important driving factors, this stock has surged by 32.32% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- You can view the full analysis from the report here: SAFM Ratings Report
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