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Sanderson Farms Rises on Healthy Q2 Results
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Sanderson Farms Rises on Healthy Q2 Results

Story Highlights

Impressive results by Sandersons Farms are reflective of its inner strength and strong demand for poultry products. Effective handling of costs and expenses will add more vigor to the stock. 

Sanderson Farms, Inc. (NASDAQ: SAFM) has lifted market sentiments by delivering better-than-expected results for the second quarter of Fiscal 2022 (ended April 30, 2022). Its earnings surpassed the consensus estimate by 20.7% and revenues exceeded the same by 10.8%.

Shares of this $4.5-billion American poultry producer grew 2.8% to close at $200 on Friday.

Financial Highlights

In the quarter, Sanderson Farms’ adjusted earnings stood at $14.39 per share, above the consensus estimate of $11.92 per share. Also, the bottom line grew 231.6% from the year-ago tally of $4.34 per share on the back of healthy sales growth, which was driven by a 33.6% rise in average selling prices. However, higher feed costs and non-feed costs played spoilsport in the quarter.

Revenues in the quarter were $1.54 billion, higher compared with the consensus estimate of $1.39 billion. On a year-over-year basis, the top line expanded 35.8% driven by healthy growth in all product categories, including frozen chicken and fresh, vacuum-sealed chicken.

The company’s costs of sales increased 11.7% year-over-year, and its operating expenses grew 3.3%. Operating income in the quarter was up 230.1% to $421.5 million.

At the end of the second quarter, Sanderson Farms’ cash and cash equivalents were $829.1 million, up 88.7% from Fiscal 2021. Also, the company’s net cash flow from operating activities totaled $474.9 million in the first half of Fiscal 2022.

Capital Deployment

In the first half of Fiscal 2022, Sanderson Farms used $9.8 million for distributing dividends to shareholders.

Stock Rating

On May 28, 2022, Kenneth Goldman of J.P. Morgan reiterated a Hold rating on SAFM with the price target of $207 (3.50% upside potential).

Overall, the stock has a Hold consensus rating. SAFM’s average price target of $207 mirrors 3.5% upside potential from current levels. Shares of SAFM have increased 20.4% over the past year.

Crowd Wisdom

According to TipRanks, investors currently have a Very Positive stance on SAFM, as 5% of portfolios tracked by TipRanks increased their exposure to the stock in the past 30 days.

Conclusion

Impressive results by Sanderson Farms are reflective of its inner strength and strong demand for poultry products. Effective handling of costs and expenses adds more vigor to the stock.

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