Sanderson Farms (SAFM) Beats On Q1 Earnings And Revenues

Sanderson Farms, Inc. Price, Consensus and EPS Surprise | Sanderson Farms, Inc. Quote

Costs/Margins

Cost of sales in fiscal first quarter increased 15.8% year over year to $702.1 million. Selling, general and administrative expenses flared up 14.1% year over year to $52.6 million.

Operating margin in the reported quarter came in at 2.2%, shrinking 300 basis points (bps) year over year.

Balance Sheet/Cash Flow

Exiting the fiscal first quarter, Sanderson Farms had cash and cash equivalents of $388.9 million, lower than $419.3 million recorded on Oct 31, 2017.

In the first three months of fiscal 2018, the company generated $25 million cash from operating activities, as against $39.5 million cash accrued in the year-ago quarter end. Capital expenditure for the fiscal first quarter totaled $51.7 million, up 11.8% year over year.

Outlook

Sanderson Farms believes sturdier demand and improved productivity will help boost its revenues in the upcoming quarters. In addition to this, the Tax Cut and Jobs Act (implemented in December 2017) will lower the company’s corporate tax burden and thereby improve its bottom-line performance in the near future.

Zacks Rank and Stocks to Consider

Sanderson Farms carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the Zacks Consumer Staples sector are listed below:

Craft Brew Alliance, Inc. (NASDAQ:BREW) carries a Zacks Rank of 2 (Buy). The company pulled off an outstanding average positive earnings surprise of 250.20% over the last four quarters. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Blue Buffalo Pet Products, Inc. (NASDAQ:BUFF) holds a Zacks Rank of 2. The company generated an average positive earnings surprise of 3.14% during the same time frame.

Church & Dwight Company, Inc. (NYSE:CHD) , which also has a Zacks Rank of 2, recorded an average positive earnings surprise of 6.61% over the preceding four quarters.

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