Sanderson Farms Increases Sales but Misses Estimates on Earnings

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Sanderson Farms (NAS: SAFM) reported earnings on Dec. 20. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Oct. 31 (Q4), Sanderson Farms beat expectations on revenue and missed expectations on earnings per share.

Compared to the prior-year quarter, revenue increased, and earnings per share shrank significantly.

Margins shrank across the board.

Revenue details
Sanderson Farms reported revenue of $560 million. The seven analysts polled by S&P Capital IQ were looking for net sales of $526 million. Sales were 5.8% higher than the prior-year quarter's $529 million.


Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS was a loss of $0.70. The six earnings estimates compiled by S&P Capital IQ predicted a loss of $0.46 per share on the same basis. GAAP EPS were -$0.97 for Q4 against $2.03 per share for the prior-year quarter.


Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was -2.1%, 2,070 basis points worse than the prior-year quarter. Operating margin was -5.3%, 1,930 basis points worse than the prior-year quarter. Net margin was -3.9%, 1,290 basis points worse than the prior-year quarter.


Source: S&P Capital IQ. Quarterly periods.

Looking ahead
What does the future hold?

Next quarter's average estimate for revenue is $511 million. On the bottom line, the average EPS estimate is a loss of $0.65. (There are five revenue estimates and four EPS estimates.)

For the full year ending 2012, the average estimate for revenue is $2.2 billion. The average EPS estimate is $2.27. (There are seven revenue estimates and six EPS estimates.)

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 227 members out of 247 rating the stock outperform, and 20 members rating it underperform. Among 73 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 65 give Sanderson Farms a green thumbs-up, and eight give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Sanderson Farms is hold, with an average price target of $47.75.

At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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