U.S. markets open in 6 hours 3 minutes

How Sanderson Farms (SAFM) Looks Just Ahead of Q1 Earnings

Zacks Equity Research

Sanderson Farms, Inc. SAFM is scheduled to report first-quarter fiscal 2020 results on Feb 27, 2020. Notably, this Mississippi-based company has trailing four-quarter positive earnings surprise of 18.8%, on average.

The Zacks Consensus Estimate for first-quarter 2019 is pegged at a loss of 74 cents per share, compared with  loss of 82 cents reported in the year-ago quarter. Notably, the loss estimate has widened significantly in the past 30 days. The consensus mark for revenues is pegged at $804.8 million, which indicates an increase of 8.3% from the prior-year 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 has been benefiting from elevated average sales price for its poultry products including jumbo wings and leg quarter among others. In its last earnings press release, management guided for improved protein prices going in 2020 on worldwide protein deficit caused by African swine fever’s impact on Asian pork supplies. Additionally, increased promotions for chicken sandwiches at quick-serve restaurants are likely to drive growth in poultry market in 2020. Moreover, the company is optimistic about retail tray pack demand in the year. We believe that these upticks are likely to have aided the company’s performance to some extent in the to-be-reported quarter. Additionally, Sanderson Farms has been gaining from robust export demand.

However, Sanderson Farms in its last earnings call stated that its production unit in Texas was non-operational for a week. This is likely to have exerted pressure on volumes in the first quarter. Moreover, sluggishness in market prices for boneless breast meat along with increased prices paid for grain is a concern. Also, elevated freight costs have been a concern for Sanderson Farms in the past few quarters.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Sanderson Farms this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Sanderson Farms carries a Zacks Rank #3 and has an Earnings ESP of 0.00%.

Stocks With Favorable Combinations

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:

Costco Wholesale COST presently has an Earnings ESP of +0.20% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Casey's General Stores CASY has an Earnings ESP of +3.45% and a Zacks Rank #2.

Target Corporation TGT has an Earnings ESP of + 0.78% and a Zacks Rank #3.

The Hottest Tech Mega-Trend of All                 

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Target Corporation (TGT) : Free Stock Analysis Report
 
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
 
Sanderson Farms, Inc. (SAFM) : Free Stock Analysis Report
 
Casey's General Stores, Inc. (CASY) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.