It looks like chicken producer Gold Kist
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
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:
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).