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.
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.
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.
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.
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.)
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.
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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 of Motley 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.