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Sanderson Inks Poultry Processing Deal with Raeford Farms

Sanderson Farms, Inc. SAFM, recently inked an agreement with House of Raeford Farms. Per the deal, the company would process House of Raeford Farms’ grown chickens at its St. Pauls facility in North California.

Sanderson Farms’ St. Pauls facility commenced operations in January this year. The company believes that the latest poultry processing deal would enhance the efficiency of the facility’s managers and employees. In addition, the highly skilled workforce would be easily able to benefit from the favorable chicken market trends this summer.  

Over the last one month, Sanderson Farms’ shares yielded a return of 14.99%, outperforming 2.50% growth recorded by the Zacks classified Food-Meat Products industry. Notably, the attractiveness of this stock is further accentuated by its favorable Vale Growth and Momentum (‘VGM’) Style Score ‘A’.

At the close of trading yesterday, shares of this Zacks Rank #3 (Hold) stock were valued at $109.06 per share, inching up 0.5% since the announcement of the aforementioned agreement on Apr 17.

Inside the Headlines

House of Raeford Farms is a Rose Hill-NC based privately-owned company. The company has its own processing facilities in four southeastern states, but primarily provides poultry grow-out services.

In late Feb 2017, House of Raeford Farms’ Teachey poultry processing facility was severely damaged due to fire. Since then, Sanderson Farms has been providing processing-related services to the company, on an interim basis.

However, per the latest long-term processing agreement, Sanderson Farms would be purchasing, processing and selling House of Raeford Farms’ grown chicken from mid-Dec 2017. Notably, the deal also gives Sanderson Farms the right to provide poultry processing services on fee basis.   

Sanderson Farms anticipates this deal to boost the St. Pauls plant’s productivity by 20.4 million pounds, 26.3 million pounds, and 12.4 million pounds in third-quarter fiscal 2017, fourth-quarter fiscal 2017, and first-quarter fiscal 2018, respectively.

Stocks to Consider

Some better-ranked stocks in the industry are listed below:

Blue Buffalo Pet Products, Inc. BUFF has an average earnings surprise of 6.83% for the last four quarters and currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here

Energizer Holdings, Inc. ENR generated an average earnings surprise of 20.50% in the trailing four quarters and presently holds a Zacks Rank #2.

Meredith Corporation MDP currently carries a Zacks Rank #2 and has an average earnings surprise of 7.62% for the past four quarters.

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