It looks like chicken producer Gold Kist (NASDAQ:GKIS) might have a bit of pheasant or squab in its gene pool. After all, the stock has flown a lot better over the past year than any mere chicken could manage.

That said, Gold Kist and its fellow poultry providers have sold off from mid-summer peaks, perhaps partly in expectation of quarterly results like these. Reported sales dropped 5% in the company's fiscal third quarter; a nearly 10% increase in pounds sold couldn't offset a nearly 14% drop in average broiler prices.

Though feed costs are down as much as one-third from year-ago levels, the company saw both gross and operating margins contract. Gross margin fell to 17% from more than 21%, and operating margin fell to roughly 12% from nearly 17% last year. Along with the lower margins, the company reported that net income dropped by approximately 18%.

One quarter does not a bad (or good) company make, especially when the company is in a commodity business with little pricing power. Despite the appearance of the financials, the company did have a few things to crow about. Export sales are up about 34% as China and Russia continue to demand more chicken, and the company continues to grow its private-label chicken business.

All in all, it would seem that the publicly traded poultry businesses are reasonably valued by the market. True, companies such as Sanderson Farms (NASDAQ:SAFM) have shown strong historic growth, but as the industry consolidates, I think double-digit growth will be increasingly difficult to achieve. While chicken export markets are currently hot, that fact isn't lost on the likes of Pilgrim's Pride (NYSE:PPC) and Tyson (NYSE:TSN), to say nothing of overseas producers.

On the plus side, Gold Kist has a solid balance sheet and an opportunity to expand its processing operations. What's more, the industry as a whole seems to be operating in a more rational fashion, and most of the players seem to believe that its cycles will be smoother than in the past. That said, we're still talking about a commodity food business here. It will remain at the mercy of uncontrollable finished-product pricing and feed input costs.

Chicken out with further Foolishness:

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).