As many packaged food companies start to stumble and sputter, Tyson Foods (NYSE:TSN)
appears to be picking up steam. With generally solid volume and pricing
trends across the business and lower feed costs boosting margins, Tyson
is starting to draw the “it's different this time” bullish arguments.
It's hard to argue with a stock that has nearly doubled over the past
year, and management's guidance sounds pretty solid, but investors
buying today need to hope for strong grain harvests and restrained
competition going forward.
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Showing posts with label Sanderson Farms. Show all posts
Showing posts with label Sanderson Farms. Show all posts
Wednesday, August 7, 2013
Thursday, May 30, 2013
Investopedia: Sanderson Farms Riding Investor Enthusiasm For Protein
Investors are certainly feeling a little more carnivorous these days, as
optimism over improving prices and margins has pushed the shares of
companies like Tyson (NYSE:TSN) to all-time highs. It certainly has hurt matters even slightly that Smithfield (NYSE:SFD)
just bagged a takeout offer at a premium price as well. That leaves
investors with a tough choice with the country's third-largest poultry
producer Sanderson Farms (Nasdaq:SAFM).
It's very difficult to goose the numbers high enough to make this stock
look cheap on a long-term basis, but the near-term momentum could make
selling today look like a chicken move.
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Wednesday, December 19, 2012
Investopedia: Sanderson Farms Does OK This Quarter, But Long-Term Value May Be Elusive
Protein production is a tough, low-margin business. Like most other
tough, low margin businesses, it's also difficult to build real economic moats and create long-term shareholder value. So while Sanderson Farms (Nasdaq:SAFM)
deserves credit for a decent quarter during challenging times,
investors would likely do well to regard this name as more of a trading
opportunity than a long-term core holding.
Read more here:
http://www.investopedia.com/
Read more here:
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Thursday, May 31, 2012
Investopedia: Cauton On Sanderson Farms Isn't Being Chicken
Investing in commodities is hard enough, but investing in those
companies that produce intermediate commodities stuck between
uncontrollable cost and uncontrollable prices is even more difficult.
Stocks like Sanderson Farms (Nasdaq:SAFM)
can definitely outperform in periods where protein supplies are scarce
and/or costs suddenly drop, but it's difficult to make long-term money
in stocks like these.
Read the full piece here:
http://stocks.investopedia.
Read the full piece here:
http://stocks.investopedia.
Monday, December 12, 2011
Investopedia: Don't Pig Out On Smithfield Foods
With export demand running strong and grain prices easing, protein producers like Smithfield (NYSE:SFD), Tyson (NYSE:TSN) and Pilgrim's Pride (NYSE:PPC) have been strong this fall. The trouble, though, is that a strong run doesn't erase a basic problem with these companies - they seldom ever earn much (if anything) above their cost of capital, and it's difficult to argue paying any premiums to book value to own these shares.
Less Bad Is Good for the Second Quarter
Smithfield's second quarter highlights how strange the Wall Street world can be, as the company's performance in absolute terms was not all that great. Performance was better than expectation, though, so it will go down as an all-in-all solid performance.
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Less Bad Is Good for the Second Quarter
Smithfield's second quarter highlights how strange the Wall Street world can be, as the company's performance in absolute terms was not all that great. Performance was better than expectation, though, so it will go down as an all-in-all solid performance.
Please follow this link for the full piece:
http://stocks.investopedia.
Thursday, November 24, 2011
Investopedia: Tyson Already Looks Overcooked
When last I reviewed Tyson Foods (NYSE: TSN), I commented that it would be an interesting stock to buy around one times book value. As it turns out, the stock briefly touched that level and had a decent run from there. Now, though, it seems there are growing expectations of improvement in the chicken market and sustainable profitability in beef and pork; so much so that there really doesn't seem to be much upside left in these shares.
Familiar Challenges Close Out the Fiscal Year
A lot of what went on in Tyson's fiscal fourth quarter will sound familiar. Sales growth looked impressive at nearly 13%, with very strong price growth in excess of 12% and very modest volume growth of less than 1%. Top line growth was led up an impressive 16% in beef, where prices rose almost 19%, and 14% in pork. Chicken revenue rose a more sedate 9% and prepared food revenue rose less than 4%, on a nearly 3% decline in volume.
Read more here:
http://stocks.investopedia.
Familiar Challenges Close Out the Fiscal Year
A lot of what went on in Tyson's fiscal fourth quarter will sound familiar. Sales growth looked impressive at nearly 13%, with very strong price growth in excess of 12% and very modest volume growth of less than 1%. Top line growth was led up an impressive 16% in beef, where prices rose almost 19%, and 14% in pork. Chicken revenue rose a more sedate 9% and prepared food revenue rose less than 4%, on a nearly 3% decline in volume.
Read more here:
http://stocks.investopedia.
Monday, June 20, 2011
Investopedia: Don't Get Piggish With Smithfield Foods
Protein stocks can be some of the most irritating stocks for an individual to consider. So much of what determines success at companies like Smithfield (NYSE:SFD), Tyson (NYSE:TSN), and Pilgrim's Pride (NYSE:PPC) is out of their control and all but impossible to predict. What's more, successful trading often demands selling when things look great and buying when things are terrible - old advice to be sure, but nevertheless still hard for many investors to follow.
The full piece can be read for free at Investopedia:
http://stocks.investopedia.
With Smithfield Foods posting its first full-year profit in a few years, and the stock up nicely relative to the S&P 500 over the last two years, investors might be wise to question whether this is a stock they want to hold for the full cycle or whether it may be time to move on to greener pastures. While protein consumption seems to be on an inexorable climb around the world, agriculture is still unpredictable and protein stocks are still tough candidates for long-term sleep-well-at-night investing.
A Good End To The Year
Smithfield Foods certainly brought home some good results for the end of its fiscal year. Revenue rose more than 7%, as Packaged Meat pushed Pork Processing to a double-digit increase and offset weaker performance in Hog Production. One potential concern comes from the volume figures - across the board volume was weak, as fresh pork volume dropped 9%, packaged meat volume fell 2%, and hog production volume fell 9%. The full piece can be read for free at Investopedia:
http://stocks.investopedia.
Thursday, May 26, 2011
Investopedia: Is There Still Time To Play The Rebound In Sanderson Farms?
Sanderson Farms (Nasdaq:SAFM) may be one of the best-run protein producers in North America, but that is not worth much to long-term investors, as big institutions run hot and cold on the shares based on the cyclical moves in poultry profitability. With the poultry market perhaps bottoming out and Sanderson's stock already off its lows, is there still time to play the eventual rebound in this business?
A Tough Second Quarter
Sanderson definitely had a tough fiscal second quarter, but it could have been quite a bit worse. Revenue fell 2% this quarter (and rose almost 12% from the prior quarter) as increased production volume was offset by lower pricing. Although whole-chicken prices rose and leg-quarter prices increased on resumed Russian imports, boneless breast prices have been quite weak, and wing prices have plummeted.
At the same time, feed prices continue to march higher. Sanderson reported that feed costs rose 41%, and that pretty much corroborates what has been going on in the grain futures markets (chicken feed is usually about two-thirds corn and one-quarter soybean meal). Unlike Tyson (NYSE:TSN) and Pilgrim's Pride (NYSE:PPC), though, Sanderson Farms does not hedge grain exposure to a large degree.
To read the full piece, please follow this link:
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A Tough Second Quarter
Sanderson definitely had a tough fiscal second quarter, but it could have been quite a bit worse. Revenue fell 2% this quarter (and rose almost 12% from the prior quarter) as increased production volume was offset by lower pricing. Although whole-chicken prices rose and leg-quarter prices increased on resumed Russian imports, boneless breast prices have been quite weak, and wing prices have plummeted.
At the same time, feed prices continue to march higher. Sanderson reported that feed costs rose 41%, and that pretty much corroborates what has been going on in the grain futures markets (chicken feed is usually about two-thirds corn and one-quarter soybean meal). Unlike Tyson (NYSE:TSN) and Pilgrim's Pride (NYSE:PPC), though, Sanderson Farms does not hedge grain exposure to a large degree.
To read the full piece, please follow this link:
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Friday, May 13, 2011
(Repost) Investopedia: Does Tyson Deserve Better?
Tyson (NYSE:TSN) is a tricky stock. Commodity food producers like Tyson almost never get the valuation that packaged food companies like Hormel (NYSE:HRL) and General Mills (NYSE:GIS) carry. Even with that being said, though, Tyson has shown itself to be relatively less volatile than other protein producers but still gets no premium for that distinction. If Tyson can somehow maintain its current levels of free cash flow production, this is a stock that value investors should seriously consider.
Very Mixed Performance for Q2
Tyson's fiscal second quarter was a real mixed bag - solid top-line performance, but not a lot of great news on profitability. Tyson reported that revenue grew about 12% in the second quarter, comfortably above the average analyst estimate. Growth was consistently positive across the board, with the company's large beef operations showing 19% revenue growth and the pork business jumping 26%. Even as a laggard, the poultry business was still up 10%.
Profits were not nearly so solid. Gross margin slid to 6.7% from 8.2% a year earlier; not a surprise, given the increase in grain, energy, packaging and other inputs. Operating income fell 12% from last year, and the operating margin compressed by 1.2%. Although operating income in the pork segment more than doubled (and margins were better than 10%), the profit in beef fell by a quarter and poultry income dropped nearly 68%.
To read the full article, follow the link:
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Monday, December 13, 2010
Smithfield's Good Times Won't Last
This has been a good year for pork and beef producers, particularly since the summer months. Stocks like Smithfield (NYSE:SFD), Tyson (NYSE:TSN), Hormel (NYSE:HRL) and Zhongpin (Nasdaq:HOGS) have all seen double-digit stock appreciation and have beaten the market by a pretty healthy margin. Unfortunately, history strongly suggests that these good times will not last, so investors need to really give careful thought to whether they want to jump on board at this point in the cycle.
A Quarter that was Good Enough
Although the world's biggest hog raiser and processor did miss the consensus top line estimate, Smithfield nevertheless did have a respectable second quarter report. Revenue rose 11% to just under $3 billion, with a big jump in revenue from hog production and double-digit growth overall in the pork business.
Profitability is where the story really gets good for this quarter. Gross margin more than doubled from the year-ago period, and operating profit rose substantially. While corn prices are at the highest levels since the summer of 2008, and corn is a major component of feed costs which are a major component of Smithfield's costs, the company nevertheless has a favorable grain cost position at present. That allowed the company to earn a record per-head profit of $16 in the fresh pork business.
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A Quarter that was Good Enough
Although the world's biggest hog raiser and processor did miss the consensus top line estimate, Smithfield nevertheless did have a respectable second quarter report. Revenue rose 11% to just under $3 billion, with a big jump in revenue from hog production and double-digit growth overall in the pork business.
Profitability is where the story really gets good for this quarter. Gross margin more than doubled from the year-ago period, and operating profit rose substantially. While corn prices are at the highest levels since the summer of 2008, and corn is a major component of feed costs which are a major component of Smithfield's costs, the company nevertheless has a favorable grain cost position at present. That allowed the company to earn a record per-head profit of $16 in the fresh pork business.
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Tuesday, August 10, 2010
Tyson Still Hard To Digest
Not all food stocks are equal. Companies like Kraft (NYSE:KFT) and Kellogg (NYSE:K) offer a certain level of stability because of their brand value and extensive product offerings, but meat producers like Tyson (NYSE:TSN) do not. With Tyson there are constant worries about oversupply, feed costs and export markets - issues that just by and large do not figure into the packaged goods companies. This June quarter is a good microcosm of that - although Tyson did deliver a solid result, worries about the next quarter are likely to keep a lid on the stock.
The Quarter That Was
Tyson's revenue beat the average estimate by nearly $200 million, as it grew almost 12% to $7.4 billion. While the company's pork business was the growth leader (up 49% to $1.2 billion), the overall leader in terms of scale was once again the beef business, which grew more than 15% to $3.1 billion.
Profitability was quite a bit better this quarter, as gross profits jumped about 60% from the year-ago level. Tyson managed to maintain this leverage throughout the operating structure, leading to overall operating income growth of almost 84%. On a segment basis, the beef business was a standout - more than doubling to $176 million, while poultry operating profits climbed 30% to $186 million. (For more, see The Bottom Line On Margins.)
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The Quarter That Was
Tyson's revenue beat the average estimate by nearly $200 million, as it grew almost 12% to $7.4 billion. While the company's pork business was the growth leader (up 49% to $1.2 billion), the overall leader in terms of scale was once again the beef business, which grew more than 15% to $3.1 billion.
Profitability was quite a bit better this quarter, as gross profits jumped about 60% from the year-ago level. Tyson managed to maintain this leverage throughout the operating structure, leading to overall operating income growth of almost 84%. On a segment basis, the beef business was a standout - more than doubling to $176 million, while poultry operating profits climbed 30% to $186 million. (For more, see The Bottom Line On Margins.)
To read the full text of this article, click below:
http://stocks.investopedia.
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