Industry Tailwinds, Efficiency Have Lifted Sanderson’s Returns, but Commodity Markets Still Rule
We are initiating coverage of Sanderson Farms with a $102 per share valuation and no moat. Our estimate implies forward fiscal 2017 enterprise value/adjusted EBITDA of 6 and forward adjusted price/earnings of 13. Although Sanderson trades at a modest discount to our valuation, we would suggest investors await a larger margin of safety.While Sanderson has seen strong returns lately (most recently 23% in fiscal 2015), results are still largely dependent on factors outside its control. Attractive ...
Sanderson Farms is a poultry processing company engaged in the production, processing, marketing and distribution of frozen chicken products, including processed and minimally prepared chicken. The company sells ice-packed, chill-packed, bulk-packed and frozen chicken, in whole, cut-up and boneless form to retailers, distributors, and casual dining operators, and to customers who resell frozen chicken into export markets. The company operates through: Sanderson Farms, Inc. (Production Division), which is engaged in the production of chickens to the broiler stage; and Sanderson Farms, Inc. (Processing Division), which is engaged in the processing, sale and distribution of chicken products.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
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