Investor Day Boosts Our Confidence in Attractive Conditions for Sanderson Farms, but Shares Rich
We left Sanderson Farms’ investor day with greater confidence in the industry’s attractive short-term demand and input cost environment, though our $126 per share valuation is intact and we see current trading levels as somewhat rich. With benign feed costs (which constitute around 45% of cost of sales) likely to continue well into fiscal 2018, spurred partly by strong corn and soy supplies grown in non-traditional states, we view the sector favorably in the near term. While we still see feed no...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.
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