Seaboard Q3 Earnings

SEB
Price	$ 3072.000
Market Cap	$ 3594.24 M
P/E TTM	10.2 x
Div yield	0.4 %
P/BV	1.36
ROE	13.4 %
LT Debt/Equity	0.00

Seaboard Corp (SEB) recently reported Q3 results. Revenue was $1622.6 M versus $1648.1 M the previous year. Income was $104.7 M versus $26.0 M the previous year. So revenues dropped slightly but profit quadrupled. This was not a total surprise because of the jump in pork prices over the last several months. The pork division increased its operating income by $45M. The recent disease that hurt the pig industry has subsided. And pork prices have pulled back from the highs of the summer. However, my reading of the industry tells me that the pig crop won't be much higher next year because of the low birth rates this year. So, I expect higher pork prices for another year or so resulting in continued good performance from this division.

But pork wasn't the only division benefiting from commodity prices. Poultry prices are also at record highs this year, and so the Butterball operating income increased by $18M. Both meat divisions are benefiting from lower feed prices also.

The marine division and the sugar division increased their incomes by $10M and $6M, respectively. The marine division narrowed its loss this quarter in part because of cheaper fuel.

I have held this stock for close to a decade and have watched its performance ebb and flow with commodity prices. However, I think we are at a good point in the cycle. Feed crops such as soy and corn are now lower because of increased production and less emphasis on ethanol, which I think was a tremendously misguided effort by American government to use more renewable energy sources. At the same time, I don't think commodity prices are so low that producers like Seaboard will be unprofitable. So, Seaboard is going to a few more good years yet!