EPS estimates for Tyson, Sanderson Farms take an upturn

The financial picture looks brighter for Sanderson Farms Inc. and Tyson Foods Inc., according to BB&T Capital Markets equity analyst Heather Jones.

In reports to investors, Jones raised her earnings per share (EPS) estimate for Sanderson's fiscal 2010, ending October 31, to US$5.60 from US$5.25, and EPS for fiscal 2011 to US$5.90 from US$5.40. Still, she noted, "We believe both our cost and pricing assumptions could ultimately prove conservative at this time."

Breast meat and tender prices are boosting overall chicken value, even though wing prices are lower on-year, she said. Meanwhile, trends in the price of corn are keeping feed costs low.

Tyson benefits from "positive fundamentals" in all three of its primary segments, Jones said in another note to investors, for many of the same reasons. In addition, Tyson's beef and pork margins remain solid, she said.

Jones boosted her earnings per share estimate for Tyson in fiscal 2010, ending at the end of September, to US$1.65 from US$1.47, and took her fiscal 2011 estimate to US$1.75 from US$1.55. In this case, too, Jones said she believes her estimates may prove low.