SAFM - Embedded Expectations Analysis - 2021 04 14
Sanderson Farms, Inc. (SAFM:USA) currently trades above corporate averages relativeto UAFRS-based (Uniform) earnings, with a 24.6x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about feed costs, poultry demand, and net sales growth
Specifically, management may have concerns about recent winter storms' impacts on their operations and chicken performance as well as the sustainability of demand for chicken wings. Moreover, management may lack confidence in their ability to sustain net sales growth, improve pullet placements, and control their overall expenses, particularly feed costs. In addition, they may be exaggerating their ability to service new customers and they may have concerns about high plant absenteeism as well as the pandemic's continued impact on their business
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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