NasdaqGS:SAFM

Stock Analysis Report

Executive Summary

Sanderson Farms, Inc., an integrated poultry processing company, produces, processes, markets, and distributes fresh, frozen, and prepared chicken products in the United States.

Rewards

Trading at 60.5% below its fair value

Earnings are forecast to grow 66.54% per year

Risk Analysis

Highly volatile share price over past 3 months



Snowflake Analysis

Excellent balance sheet and fair value.


Similar Companies

Share Price & News

How has Sanderson Farms's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SAFM's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-0.3%

SAFM

0.1%

US Food

0.9%

US Market


1 Year Return

15.2%

SAFM

10.1%

US Food

20.0%

US Market

Return vs Industry: SAFM exceeded the US Food industry which returned 10.2% over the past year.

Return vs Market: SAFM underperformed the US Market which returned 20.1% over the past year.


Shareholder returns

SAFMIndustryMarket
7 Day-0.3%0.1%0.9%
30 Day-11.9%-0.7%1.4%
90 Day-15.1%2.9%8.8%
1 Year16.3%15.2%13.1%10.1%22.5%20.0%
3 Year52.1%46.8%-0.3%-8.3%49.9%40.3%
5 Year82.4%69.2%42.8%26.2%73.2%54.1%

Price Volatility Vs. Market

How volatile is Sanderson Farms's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Sanderson Farms undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SAFM ($139.55) is trading below our estimate of fair value ($353.63)

Significantly Below Fair Value: SAFM is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: SAFM is poor value based on its PE Ratio (58x) compared to the Food industry average (25.5x).

PE vs Market: SAFM is poor value based on its PE Ratio (58x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: SAFM is good value based on its PEG Ratio (0.9x)


Price to Book Ratio

PB vs Industry: SAFM is overvalued based on its PB Ratio (2.2x) compared to the US Food industry average (2x).


Next Steps

Future Growth

How is Sanderson Farms forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

66.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SAFM's forecast earnings growth (66.5% per year) is above the savings rate (1.7%).

Earnings vs Market: SAFM's earnings (66.5% per year) are forecast to grow faster than the US market (14.6% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: SAFM's revenue (6% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: SAFM's revenue (6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SAFM's Return on Equity is forecast to be low in 3 years time (18.6%).


Next Steps

Past Performance

How has Sanderson Farms performed over the past 5 years?

-23.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SAFM has high quality earnings.

Growing Profit Margin: SAFM's current net profit margins (1.5%) are lower than last year (1.9%).


Past Earnings Growth Analysis

Earnings Trend: SAFM's earnings have declined by -23.1% per year over the past 5 years.

Accelerating Growth: SAFM's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: SAFM had negative earnings growth (-13.3%) over the past year, making it difficult to compare to the Food industry average (-6.2%).


Return on Equity

High ROE: SAFM's Return on Equity (3.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Sanderson Farms's financial position?


Financial Position Analysis

Short Term Liabilities: SAFM's short term assets ($581.1M) exceed its short term liabilities ($215.7M).

Long Term Liabilities: SAFM's short term assets ($581.1M) exceed its long term liabilities ($140.8M).


Debt to Equity History and Analysis

Debt Level: SAFM's debt to equity ratio (3.9%) is considered satisfactory.

Reducing Debt: SAFM's debt to equity ratio has increased from 2.2% to 3.9% over the past 5 years.

Debt Coverage: SAFM's debt is well covered by operating cash flow (376%).

Interest Coverage: SAFM's interest payments on its debt are well covered by EBIT (16.4x coverage).


Balance Sheet

Inventory Level: SAFM has a high level of physical assets or inventory.

Debt Coverage by Assets: SAFM's debt is covered by short term assets (assets are 10.6x debt).


Next Steps

Dividend

What is Sanderson Farms's current dividend yield, its reliability and sustainability?

0.92%

Current Dividend Yield


Dividend Yield vs Market

company0.9%marketbottom25%1.4%markettop25%3.7%industryaverage2.7%forecastin3Years1.1%

Current dividend yield vs market & industry

Notable Dividend: SAFM's dividend (0.92%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.44%).

High Dividend: SAFM's dividend (0.92%) is low compared to the top 25% of dividend payers in the US market (3.69%).


Stability and Growth of Payments

Stable Dividend: SAFM's dividend payments have been volatile in the past 10 years.

Growing Dividend: SAFM's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (53.2%), SAFM's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SAFM's dividends in 3 years are forecast to be well covered by earnings (25% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

20.8yrs

Average management tenure


CEO

Joe Sanderson (71yo)

30.3yrs

Tenure

US$4,147,894

Compensation

Mr. Joe F. Sanderson, Jr. has been the Chairman of Sanderson Farms, Inc. since January 8, 1998 and as its Chief Executive Officer since November 1, 1989. Mr. Sanderson served as the President of Sanderson  ...


CEO Compensation Analysis

Compensation vs Market: Joe's total compensation ($USD4.15M) is about average for companies of similar size in the US market ($USD4.89M).

Compensation vs Earnings: Joe's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Joe Sanderson
Chairman & CEO30.3yrsUS$4.15m3.72% $115.2m
Lampkin Butts
President22yrsUS$1.44m0.49% $15.3m
D. Cockrell
CFO, Chief Legal Officer22yrsUS$1.22m0.47% $14.6m
Timothy Rigney
Corporate Secretary7.3yrsUS$447.61k0.066% $2.0m
Brian Romano
Director of Administration & Human Resources0yrsno datano data
Robin Robinson
Director of Organization Development & Corporate Communication0yrsno datano data
Hilary Burroughs
Director of Marketing0yrsno datano data
Bob Rosa
Chief Financial Analyst0yrsno datano data

20.8yrs

Average Tenure

64.5yo

Average Age

Experienced Management: SAFM's management team is seasoned and experienced (20.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Joe Sanderson
Chairman & CEO30.3yrsUS$4.15m3.72% $115.2m
Lampkin Butts
President22yrsUS$1.44m0.49% $15.3m
D. Cockrell
CFO, Chief Legal Officer22yrsUS$1.22m0.47% $14.6m
John Baker
Independent Director26.1yrsUS$243.46k0.090% $2.8m
Phil Livingston
Lead Director0yrsUS$277.41k0.051% $1.6m
Edith Kelly-Green
Independent Director1.4yrsUS$232.06k0.0083% $258.4k
Gail Pittman
Independent Director18.1yrsUS$254.90k0.070% $2.2m
Suzanne Mestayer
Independent Director2.6yrsUS$265.05k0.014% $448.9k
Toni Cooley
Independent Director13.1yrsUS$241.85k0.11% $3.5m
Fred Banks
Independent Director13.1yrsUS$279.67k0.10% $3.3m

18.1yrs

Average Tenure

67yo

Average Age

Experienced Board: SAFM's board of directors are seasoned and experienced ( 18.1 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Sanderson Farms, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Sanderson Farms, Inc.
  • Ticker: SAFM
  • Exchange: NasdaqGS
  • Founded: 1947
  • Industry: Packaged Foods and Meats
  • Sector: Food, Beverage & Tobacco
  • Market Cap: US$3.102b
  • Shares outstanding: 22.23m
  • Website: https://www.sandersonfarms.com

Number of Employees


Location

  • Sanderson Farms, Inc.
  • 127 Flynt Road
  • Laurel
  • Mississippi
  • 39443
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SAFMNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDMay 1987
SF9DB (Deutsche Boerse AG)YesCommon StockDEEURMay 1987

Biography

Sanderson Farms, Inc., an integrated poultry processing company, produces, processes, markets, and distributes fresh, frozen, and prepared chicken products in the United States. The company sells ice-packed, chill-packed, bulk-packed, and frozen chicken primarily under the Sanderson Farms brand name to retailers, distributors, and casual dining operators in the southeastern, southwestern, northeastern, and western United States, as well as to customers who resell frozen chicken into export markets. Its prepared chicken product line includes institutional and consumer packaged partially cooked or marinated chicken items for distributors and food service establishments. Sanderson Farms, Inc. was founded in 1947 and is headquartered in Laurel, Mississippi. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 23:50
End of Day Share Price2020/02/14 00:00
Earnings2019/10/31
Annual Earnings2019/10/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.