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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Sanderson Farms, Inc. (XNAS:SAFM) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
SAFM
Name:
SANDERSON FARMS, INC. (XNAS:SAFM)
Sector:
248.63M
Industry:
Packaged Foods
CEO:
Mr. Joe Sanderson
Total Employees:
2,021
Our Technological Advancement Rating
Our Rating:
A
Technological advancement compared to industry is 349.52% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF SANDERSON FARMS, INC.(SAFM) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND PACKAGED FOODS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
209.2
One Month Price Target:
$209.83
Six Month Price Target :
$212.96
Likely Price in One Year's Time:
Ticker:
$216.71
Likely Trading Range Today Under (Normal Volatility)
$208.56
Price Upper limit ($) :
$210.09
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$200.28
This week:
$189.25
This month :
$169.31
Other Primary facts
Market Cap:
4.67B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
22.32M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
14.68%
-11.53%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$250.58
$231.49
$167.82
$186.91
Medium risk (<10%) entry points
Buy Call
Sell Call
$225.28
Buy Put:
Sell Put:
$221.20
$193.07
$197.20
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
SAFM
Sharpe Ratio:
2.39%
Comparison:
SAFM, is amongst the top 40% stocks with highest risk-adjusted returns
Sharpe ratio is 82.15% higher than the industry
& ratio is 4.73% higher than the market/S&P 500 average
Average Returns/Yield of
SAFM
Daily returns:
0.06%
Weekly returns:
0.30%
Monthly returns:
1.18%
Yearly returns:
8.42%
Comparison of returns:
Average annual returns/yield (last 3 years) is 68.48% above industry average
Classification:
SAFM, is amongst the top 40% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.99
Statistical test of Returns:
SAFM has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.10%
Weekly Volatility:
4.71%
Monthly Volatility:
9.41%
Yearly Volatility:
32.61%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
-
-
Value at Risk Analysis (VaR)
Daily VaR:
-4.26%
Weekly VaR:
-9.53%
Monthly VaR:
-19.07%
How Much Can the price of
SAFM
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-16%
Worst case (decline):
-66.06%
This translates to price declining to:
$175.34
This translates to price declining to:
$71.01
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
SAFM is a 34.59% riskier investment compared to the market/S&P 500 & is 15.30% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -7.98% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
SAFM
Beta in relation to market/S&P 500--0.53
Expected beta in 1 year's time:
-
Expected beta in 3 year's time:
-
Unlevered (debt free) Beta:
0.532
Beta in relation to Nasdaq (XNAS):
0.376
Beta in relation to all global stocks::
0.509
Beta Comparison & Analysis
Beta of competitors/peers::
0.918
Beta is -41.79% lower than peers
Average Industry Beta:
0.586
Beta is -8.81% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
25.81%
Sustainable growth rate is 185.04% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.074
Alpha is 487.46% above industry average alpha yield
Alpha is 469% higher than market/& is unsustainably high
Analysis of Cost of Capital of
SAFM
Equity cost of capital:
0.068
Equity cost of capital is -4.94% below industry mean WACC
Unlevered (without debt) cost of capital:
6.78%
Before-tax cost of debt:
9.69%
After-tax cost of debt:
7.65%
Overall debt rating:
Non-investment grade (junk/speculative grade
Weighted average cost of capital (WACC):
7.65%
WACC is 20.54% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$251.95
Revenue growth rate per share of (3Y):
2.29
Annual revenue growth rate is 49.92% above the industry average
EPS:
$38.64
Expected Annual growth rate of EPS (3Y):
128.07%
Expected future EPS growth rate is 610.04% higher than the Packaged Foods industry
Free cash flow (FCF) per share:
$36.17
Balance sheet equity growth per share: 40.18%
Equity growth rate per share is 727.53% higher than the industry
Debt per share
$0.60
EBITDA per share
$58.52
Valuation Analysis Today of
SAFM
P/E Ratio:
5.41
P/E Ratio of Competitors/Peers:
281.96
P/E ratio is -98.08% lower than main peers & is -85.99% lower than the industry
Stock price/value with industry average P/E ratio: $1,493.06
SAFM is -85.99% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $106.10
Present value of the expected future dividends only: $69.45
P/S (Price to Sales ratio):
0.83
Price to sales ratio is -64.20% below the industry mean
P/B (Price to book value ratio):
2.29
Price to free cash flow: 5.78
Price to free cash flow ratio is -83.95% lower than the industry
Net income growth rate (3Y):
665.41%
Net income growth rate is 6085.16% higher than the average industry net income growth rate
Dividend Analysis
-
Dividend yeild: 0.84%
Previous Dividend: $0.44
Previous adjusted dividend: $0.44
Previous Dividend: $1.76
Expected next dividend best case: $0.49
Expected next dividend worst case: $0.39
Average dividend payment (long-term): $0.40
Average dividend increase/decrease (growth rate) % per period: 4.17%
Expected next dividend payment date: 15/08/2022
Expected next dividend record date: 08/01/2022
Expected next dividend declaration date: 20/07/2022
Previous dividend payment date: 17/05/2022
Previous dividend record date: 05/03/2022
Previous dividend declaration date: 21/04/2022
Dividend History:
2022-05-02--$0.44
2021-10-04--$0.44
2021-05-03--$0.44
2022-01-31--$0.44
2021-08-02--$0.44
2021-02-01--$0.44
Dividend growth rate is -1250.28% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
0.66%
Net debt to equity ratio:
-32.45%
Debt to assets ratio:
0.52%
Net debt to assets ratio:
-25.60%
Debt-to-asset ratio is -99.03% below industry average
Ability to repay debt:
Interest coverage ratio:
557.51
Interest coverage ratio is 126.07% more than industry average
Looking forward:
Debt growth rate:
-56.96%
Annual debt growth is -120% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.369
Statistical significance of correlation:
SAFM has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.429
Stock price is -13.92% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.429
Correlation of price movement with Nasdaq (^IXIC):
0.028
Covariance of price movement with the market:
0.035
Kurtosis
8
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.564
Returns are right (positive) skewed; mean returns are greater than median and mode returns
Fundamental Analysis & Dupont Analysis of
SAFM
Gross Profit Margin Ratio:
102%
Operating Profit Margin Ratio:
20.15%
Operating profit margin is 317.36% higher than the industry
Net Profit Margin Ratio:
102%
Effective Tax Rate:
23.71%
Effective tax rate is -41.84% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
42.31%
Return on equity (ROE) is 283.04% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
33.38%
Return on assets (ROA) is 647.38% higher than the industry
Financial Leverage:
1.0x
Current Ratio:
3.75
Current ratio is 36.82% above industry average
Cash Conversion Cycle (days):
5.3
Cash conversion cycle is -89.30% below industry average
The remaining useful life of property plant & equipment is: 3.0 years
Stock based compensation to net income ratio:
0.97%
In-depth Efficiency Analysis
Revenue generated per employee:
2.8M
Each employee generates 253% more revenue than industry average revenue per employee
EBITDA generated per employee:
646.3K
Each employee generates 473% more EBITDA than industry average revenue per employee
Profit generated per employee:
426.9K
Each employee generates 718% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
123.0K
Each employee generates -3406% less free cash flow than industry average revenue per employee
Assets/Capital per employee
612.3K
Each employee generates -3406% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
SAFM
NATIONAL BEVERAGE CORP. (XNAS:FIZZ)
CELSIUS HOLDINGS, INC. (XNAS:CELH)
BEYOND MEAT, INC. (XNAS:BYND)
FRESHPET, INC. (XNAS:FRPT)
THE SIMPLY GOOD FOODS COMPANY (XNAS:SMPL)
LANCASTER COLONY CORPORATION (XNAS:LANC)
Oatly Group AB (XNAS:OTLY)
GRAND CANYON EDUCATION, INC. (XNAS:LOPE)
Sprouts Farmers Market, Inc. (XNAS:SFM)
Current Analyst Ratings
Strong buy�0%
Buy�0%
Hold�38%
Sell�13%
Strong sell�4%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
4/30/22
Revenue:
5.62B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
4.18B
1.44B
-
208.68M
288.95M
13.89M
- 9172.00K
279.78M
180.00K
2.34M
173.14M
1.31B
1.13B
862.70M
1.13B
268.06M
862.70M
Statement of Cash Flow
Date:
Period:
43.52M
Differed Income Tax :
3.93M
Stock Based Compensation :
8.41M
Change in Working Capital :
27.95M
Accounts Receivables:
- 217.00K
Other Working Capital:
58.36M
Other Non-Cash Items:
- 119.00K
Net Cash Provided by Operating Activities:
276.50M
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
1/31/22
2022
Q1
685.82M
-
685.82M
224.08M
367.45M
69.81M
1.35B
1.23B
-
-
-
-
5.93M
1.24B
-
2.58B
206.90M
10.71M
50.95M
-
141.34M
358.94M
13.48M
13.01M
186.95M
-
545.88M
22.32M
1.91B
-
-
January 31, 2022 at 7:00:00 AM
4.46B
2.04B
2.58B
-
24.18M
- 661639.0K
-
- 27720.00K
- 27720.00K
-
-
-
-
- 2298.00K
- 2298.00K
-
246.48M
685.82M
439.34M
276.50M
- 27876.00K
248.63M
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
SAFM
2023
2024
2025
2026
2027
$217.79
$225.61
$233.71
$242.11
$250.80