Boston, MA 05/14/2014 (wallstreetpr) – Sanderson Farms, Inc. (NASDAQ:SAFM) is building a new complex in east-central Texas that includes a processing plant, growers, hatchery and feed mill. Peco Foods, another poultry producer and supplier is in a similar investment as is the case with many other poultry companies. The increase in investment, in poultry facilities indicates growing optimism among players about the future of the industry.
The past year was a rewarding season for the poultry industry and the market opportunities seem to be far from over as can be seen in the most recent financial performance of various industry players. Sanderson Farms, for instance, had a strong 1Q2014 that was reported on February 25. The company had earned $1.25 per share in the quarter, beating Wall Street estimate of $0.85. Revenue also came in strongly at $585 million, ahead of $573 million that analysts expected for the quarter.
Reason for optimism
Sanderson Farms, Inc. (NASDAQ:SAFM) and its peers in the poultry business are optimistic about the future because of the anticipated strong demand for poultry products amid troubles in the beef and pork production. The optimism is also supported by the fact that poultry companies are witnessing the decline in production costs and favorable prices.
The supply crunch that currently defines the cattle industry has driven up costs and kept many people away from beef. However, the low production costs in the poultry industry have not only supported big production but also makes poultry favorable in price compared with beef. As concerns pork supply, pork producers are battling a serious virus that has reduced supply and raised prices. As such, poultry companies such as Sanderson Farms, Inc. (NASDAQ:SAFM) have an expanded protein market that is likely to exist for a longer time into the future.
Increasing incomes
The environment of high incomes also bodes well for the poultry industry as many people spend more money on protein foods, therefore, improving poultry consumption and the demand for the related products.
Perhaps unlike peers, Sanderson Farms, Inc. (NASDAQ:SAFM) enjoys efficiency in its operations that should support more savings while supporting the bottom-line amid widespread demand for poultry.
