Source: MEATINGPLACE, 12/19/14

Wall Street analysts see 2015 shaping up as another strong year for Sanderson Farms, with high beef prices, falling oil prices and improving consumer demand expected to support earnings.

“If supply turns out to be higher, improved demand may eat it. We also think export demand could improve next year,” said BB&T Capital Markets analyst Brett Hundley. He boosted his 2015 forecast for Sanderson earnings to $10.38 a share from $10.14 previously.

BMO Capital Markets analyst Kenneth Zaslow raised his forecast for next year as well, after Sanderson on Thursday reported fourth-quarter profit more than doubled from a year ago.

Sanderson will continue to generate historically strong margins as food service menus shift to chicken from beef, lower gas prices give consumers more discretionary income for dining out, and export demand strengthens, Zaslow said.

Yet the chicken industry remains cyclical, and profit margins should peak due to expected production increases and a rebound in feed costs, Zaslow said. Capacity constraints will limit production expansion, he added.

Zaslow raised his 2015 earnings estimate for Sanderson to $11.63 a share from $10.94.  

Stephens analyst Farha Aslam kept her fiscal 2015 estimate at $12.70.

“Sanderson management is optimistic with regard to the U.S. consumer in 2015, as lower gas prices, higher hours worked, increased labor participation and an increase in wages are expected to result in about $450 billion of additional disposable income,” she wrote in a note to clients.

For more stories, go to www.meatingplace.com.