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How Sanderson Farms (SAFM) Looks Just Ahead of Q3 Earnings

Zacks Equity Research

Sanderson Farms, Inc. SAFM is scheduled to report third-quarter fiscal 2019 results on Aug 29. Notably, this Mississippi-based company missed the Zacks Consensus Estimate in two of the trailing four quarters.

Let’s see what awaits the upcoming quarterly release.

Where Are Estimates Heading?

The Zacks Consensus Estimate for fiscal third-quarter earnings is currently pegged at $2.84, significantly up from 58 cents reported in the year-ago period. The Zacks Consensus Estimate has remained stable over the past 30 days. The consensus mark for revenues is pegged at $965 million, indicating growth of 13.2% from the year-ago quarter’s reported figure.

Sanderson Farms, Inc. Price and EPS Surprise

 

Sanderson Farms, Inc. Price and EPS Surprise

Sanderson Farms, Inc. price-eps-surprise | Sanderson Farms, Inc. Quote

 

Factors to Consider

Sanderson Farms is focusing on operations in its Tyler plant, which is moving toward full production.  We expect contributions from the plant to positively impact the company’s performance in the quarter to be reported. Additionally, the quarterly performance is likely to gain from export demand, which was strong in the last reported quarter as well.

Further, Sanderson Farms paints a rosy picture with respect to the chicken market. Retail tray pack demand is projected to be sturdy. Apart from this, the company foresees strong prices and solid demand for its chicken products. Encouragingly, management stated that it will process fresh chicken to the tune of 1.22 billion pounds in the fiscal third quarter.

However, the company expects grain and chicken markets to remain volatile in the second half of fiscal 2019. Notably, the grain market is likely to face adverse weather conditions, trade concerns and shift in planting timings. Additionally, the African swine flu and trade-related issues may act as deterrents for the chicken market. This might have negatively impact the company’s profitability in the to-be-reported quarter.

Also, Sanderson Farms has been battling elevated SG&A costs over the last few quarters. The company expects SG&A costs to be $50 million for third-quarter fiscal 2019, which is likely to dent the bottom-line performance.

What the Zacks Model Unveils

Our proven model does not conclusively show that Sanderson Farms is likely to beat earnings estimates in the quarter to be reported. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Sanderson Farms has a Zacks Rank #3 and an Earnings ESP of 0.00%, which makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Casey's General Stores, Inc. CASY has an Earnings ESP of +8.43% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores, Inc. BURL has an Earnings ESP of +1.13% and a Zacks Rank #2.

Costco Wholesale Corporation COST has an Earnings ESP of +0.30% and a Zacks Rank #3.

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Sanderson Farms, Inc. (SAFM) : Free Stock Analysis Report
 
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