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Beige Book: Recession Moderating – Analyst Blog

Charles Rotblut — Wed, 10 Jun 2009 21:36:37 +0000

The recession is moderating, though growth will not occur in the second half

The June Beige Book confirmed what I have been saying for weeks: the pace of deterioration has slowed. Five districts said that the "downward trend is showing signs of moderating."

Counter-balancing this was the expectation that there will not be "a substantial increase in economic activity" throughout the remainder of the year. Again, this is inline what with the trends I'm drawing from the economic and earnings estimate revision data. Conditions are improving, but we are nowhere near to getting out the woods.

On the positive side, signs of improvement were noted in import and export activity, discount retail and lower-priced homes. Though this might sound like good news for Masco (MAS) or Dryships (DRYS), it's important to note that we're still far from a recovery in housing or transportation.

On the negative side, credit remained tight. Several districts blamed the lack of lending activity for depressing auto sales, which is problematic for Ford (F) and other car makers.

Agriculture also had problems. Above-normal rainfall delayed planting in some districts, while drought hurt Oklahoma's wheat crop. Lower cattle and hog prices combined with higher feed costs were reported in some districts, which could adversely affect Sanderson Farms (SAFM) and its peers.
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Zacks Investment Research

Sanderson Farms Stays Plucky – Analyst Blog

Zacks Market Commentaries — Mon, 09 Feb 2009 16:16:16 +0000

Sanderson Farms (SAFM) is the 4th largest poultry processing company in the U.S. The improved efficiencies at the company's poultry complexes in Georgia and Mississippi, along with the new facility in Waco, Texas, should improve unit operating costs and increase production levels in fiscal 2009.

However, grain costs increased substantially in fiscal 2008 resulting in a loss. Even though grain prices have declined, the Hold rating is maintained.

Due to the company's volatile earnings and losses reported in fiscal 2006 and 2008, the stock is best valued on a price-to-sales basis. During the last five years, the stock has traded in the range of 0.26 to 0.94 times sales.

There is considerable commodity risk involved with the production of chicken products, both on the pricing of end-products and the costs of feed, processing, and storage. With stock currently trading at 0.44 times sales, the target is a 0.47 price-to-sales ratio or $38.75 per share.

Read the full analyst report on SAFM

"SAFM" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Sanderson Farms’ Higher Costs

Zacks Market Commentaries — Tue, 19 Aug 2008 09:43:20 +0000

The improved efficiencies at Sanderson Farms, Inc.s (SAFM) poultry complexes in Georgia and Mississippi, along with the new facility in Waco, Texas, should enhance improve unit operating costs and increase production levels in fiscal 2008. However, grain costs are expected to continue increasing in 2008. As a result, the construction of a new complex in Kinston, North Carolina has been delayed. The Hold rating is maintained.

The companys new facility, which opened during the fourth quarter of 2007, added 18 percent to the existing capacity. Though construction is currently being delayed, the company plans to build a new feed mill, poultry processing plant, and hatchery in Kinston, North Carolina. The new complex at its full capacity will be equipped to process 6.7 million pounds of dressed poultry meat per week.

Due to the companys volatile earnings and loss reported in fiscal 2006, the stock is best valued on a price-to-sales basis. During the last five years, the stock has traded in the range of 0.33 to 0.94 times sales. There is considerable commodity risk involved with the production of chicken products, both on the pricing of end-products and the costs of feed, processing, and storage. With stock currently trading at 0.54 times sales, the target is a 0.60 price-to-sales ratio or $48 per share.

Read the full analyst report on SAFM

"SAFM" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Sanderson Farms Inc. (SAFM) Knows Why the Chicken Crossed the Road

QualityStocks — Wed, 04 Jun 2008 17:59:39 +0000

If you were a chicken you would to, considering Sanderson Farms Inc.’s production output is over 2 billion pounds a year. Sanderson Farms is a producer, processor, marketer, and distributor of fresh and frozen chicken and other prepared food items. Their 2007 sales were over $1B in products sold under the Sanderson Farms brand name. With [...]

Next Big Play in China: Pork

Trader Mark — Sun, 26 Aug 2007 19:03:53 +0000

With fertilizer companies and agricultural stocks in general booming due to the development of emerging markets – an interesting story caught my eye. Smithfield Foods (SFD) announces a deal to export 60 million pounds of pork to China by the end of December, due to a shortage there due to disease. From the news reports [...]