Sanderson Farms - Let's Play A Game Of Chicken With The Shorts

| About: Sanderson Farms, (SAFM)
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If a couple of months of reading weren't enough, we have another chapter regarding the Georgia Dock chicken price manipulation allegations.

Once again, Sanderson Farms is assumed to be guilty by the association.

New information presented, however, focuses much more on Tyson and Pilgrim's Pride as the plausible chicken fiasco culprits.

It is without question that Sanderson Farms is highly transparent; this transparency is what distances it from these allegations.

Source: Google Images

In my last piece, I attempted to provide my opinions in response to ManBearChicken's initial article. This piece will look to provide a clearer picture regarding Sanderson Farms' (NASDAQ:SAFM) retail pricing and its relationships to major indices. This exercise will shed some light on pricing relationships, as well as illustrate how truly complex the industry can be.

Current chicken price manipulation allegations do not present any clear facts regarding improper pricing. The only clear fact is that a discrepancy exists between the Georgia Dock and spot market commodity prices.

Sanderson Farms Sells Chicken

Sanderson Farms is truly a great company to learn from. The information available for the product that it sells (chicken) is everywhere. Not only is it everywhere, but also the company goes out of the way to provide even more detailed information to whomever is interested.

Source: Sanderson Farms Form 10-K, 2015

The table above includes Sanderson Farms' major product lines. These include value-added services such as chill pack, fresh bulk pack and frozen. They also include ice pack and prepared chicken. Most of us are familiar with the chill pack and value-added products, many of which are sold at retail grocery stores and supermarkets.

Source: Google Images

The benefit of this table is that these percentages can be applied to Sanderson Farms' total net sales. This is the first piece to a puzzle to deconstruct the relationship between net sales, poultry pounds sold and tray pack versus big bird deboning index pricing.

The Georgia Dock manipulation claims are directly tied to how Sanderson Farms generates net sales. Deconstructing the company's net sales by product lines is key in illuminating how aggregated invoices relate to pricing, both by Sanderson Farms' information and accepted spot market pricing versus the Georgia Dock.

Source: Sanderson Farms Form 10-K, 2015

From the 10-K's percentages, I have constructed the actual revenues by product line. Prepared chicken has ebbed and flowed between five and seven percent over the past few years. Value-added chicken produced has ranged between 92 and 95 percent. Ice pack chickens produced has typically been the least impactful revenue stream.

Sanderson Farms Produces Chicken

Source: Sanderson Farms Form 10-K, 2015

SAFM provides investors a clear picture of the amount of beginning and ending quarterly inventory. These amounts change as the company processes and sells its poultry products to its retail and wholesale customers.

During fiscal-year 2015, the company processed and sold 3.4 and 3.5 million pounds of poultry, respectively. Through July 2016, the company processed and sold 2.8 and 2.7 million pounds of poultry, respectively, up nine and eight percent versus last year. This is in part due to the recent capacity expansion in Palestine, Texas, combined with consumer demand.

We should remember that Sanderson Farms has continued to grow its market share organically through the expansion of its tray pack and big bird deboning capacities. The company is on track to complete another big bird deboning facility in North Carolina during 2017.

Source: Sanderson Farms financials and personal database

Over the past few years, the trend for both processed and sold poultry has been very close with minimal deviations. This is important to recognize because Sanderson Farms provides a breakout of its tray pack versus big bird deboning percentages. These percentages relate directly to poultry processed. As noted on the preceding 10-K table, packaged chicken is now included in the processed amounts.

The key factor for Sanderson Farms to recognize net sales is dependent upon how many pounds of poultry are sold. To identify a percentage between tray pack and big bird deboning, we can consider the split provided for poultry processed. Since these amounts do not vary by much, the same percentage splits for poultry sold can generally be assumed.

Sanderson Farms Charges Prices For Chicken Produced To Retail & Wholesale Customers - Georgia Dock Controversy Is In The Spotlight

There are two primary ways that Sanderson Farms explains how pricing relates to the poultry it processes and sells. The first is for its tray pack, or chill pack retail grocery market. The second is for the big bird deboning market or wholesale customers.

Source: Jefferies Consumer Conference, June 2016

For the tray pack market, the company explains that a medium-sized bird is used to cut and package products in various sized individual trays to customer specifications. These products involve long-term contracts with most customers.

As has been highlighted, these contract agreements, which price the products, are based on a formula that uses the Georgia Dock whole bird price as its base, as well as various other guidelines for the relationship between the parties. There is no requirement for the customers to purchase any specific amount of product. This basically lets the market dictate supply and demand.

Source: ManBearChicken Graphic. Price data from USDA, Urner Barry, Express Markets

This graphic which displays the highly-correlated spot market activity between the USDA and Urner Barry and Express Markets, Inc., EMI data is worth noting. The correlation is a validation that the USDA composite spot market commodity data can be used interchangeably.

Source: USDA, Georgia Dock

The most recent USDA and Georgia Dock data shows that there was a short-lived recovery of the USDA data towards equilibrium this past summer, but that prices have again diverged from the current Georgia Dock levels. Since the allegations for chicken price manipulation, no one has attempted to dig deeper into Sanderson Farms' pricing relative to any of these indices.

The Georgia Dock is unique in that many other industries do not necessarily have a long-term contract-based index. Most other industry indices are based on spot market activity. This is most notable for freight industries including trucking and ocean and air freight.

The other relationship which is worth highlighting is the negotiation of long-term versus short-term contracts. Long-term contracts tend to have a premium price, but this premium price often entails agreed-upon performance targets to ensure that customers are getting their value.

During times of spot market commodity price declines, customers may attempt to renegotiate their long-term contracts at lower prices. Depending upon the cycle within varying industries, product and service providers are not always amenable to substantial reductions.

The bottom line here is margin. Everyone is looking to maximize their margins. But retailers often can pass on higher costs to consumers. The Georgia Dock has always maintained a premium above spot market activity. With recent increasing volatility, this premium has been eliminated during brief periods, but today the opposite has occurred.

The other factor worth mentioning is the lag effect. There is a lag effect for spot market activity and the data compiled from retail transactions. And there is a lag effect from the timing of when long-term contracts are up for renegotiation and where the market is during any given time.

It is clear that the Georgia Dock has declined during 2016. It has by no means declined at any level in line with spot market pricing. The fact that spot market rates were at all-time highs during 2013 and 2014 could have prompted some to negotiate during recent dips based on concerns over any sustained higher pricing levels. There was no way to assume that the export market would suffer from avian influenza, AI, or the strengthening of the dollar.

The bottom line is there is a very complicated structure related to the number of hens laying eggs, young chickens being raised to maturity, cold storage inventory levels, the price and consumption of ethanol, the price of oil, input commodity feed prices (corn and soybean meal), among other factors. Producers and their customers are in the weeds of these factors and are attempting to manage business as best as possible.

Source: Jefferies Consumer Conference, June 2016

Big bird deboning utilizes a large bird versus the medium size for tray pack. Dark meat from these birds is sold primarily as frozen leg quarters in export markets or as fresh whole legs to further processors. White meat is generally sold as fresh deboned breast meat, chicken tenders and whole or cut wings. All four of these types of products are sold at spot market commodity prices.

Most of us are very familiar with white meat products from food service companies and restaurants such as Sysco Corporation (NYSE:SYY) and McDonald's Corporation (NYSE:MCD). A key point worth noting here is that Sanderson Farms sells most leg quarters as frozen product for exports. The preceding table above showed that only about six percent of total net sales or $175 million related to frozen product. We can assume that these were leg quarters. The decline in sales is a direct reflection of the recent reduction in exports to Mexico and Asia from the recent AI.

Source: USDA, Southern States

The USDA data can again be used as a supplement to Urner Barry, EMI and other professional industry analyst experts. The categories included in the chart above have been validated against the Comtell information from the recent summer conference.

The USDA datasets can be used to compare Sanderson Farms' quarterly net sales per pound information. Additionally, this information can be used to obtain average pricing for any quarterly period.

Deeper Dive Into Sanderson Farms Chicken Pricing

At this point, it should be clear that there are five primary sources of USDA data that correlate to industry expert spot market pricing for chicken commodities. It should also be clear that Sanderson Farms views its business in two fashions, tray pack and big bird deboning. Using the company's financial data, presentation information, USDA data and other factors, we can begin to deconstruct how pricing relates to net sales and pounds of poultry sold.

Source: Sanderson Farms financials, USDA, Georgia Dock and personal database

The beauty of Sanderson Farms is that it processes and sells chicken as its sole product. This manufacturing and production business model forms a simple math equation. Pounds processed and sold times price equals net sales. As displayed earlier, Sanderson Farms gives us net sales and pounds of poultry sold. By dividing the two, we can get a quarterly, trailing period and annual total net sales per pound amount.

The chart above provides this trend from 2013 to the current quarter estimate for the fourth quarter of fiscal-year 2016, ending in October. At first glance, we would eagerly state that Sanderson Farms' average price per pound has typically been at a discount to the USDA weekly whole bird average. This is positive as it reflects a further discount from the criticized Georgia Dock deviation of late. We should remember that the USDA and Georgia Dock pricing indices are used for the tray pack segment.

But this would be a flawed and premature attempt at victory as we know that SAFM's pricing drivers are made up of five categories, and therefore, cannot be solely measured against the whole bird indices for the tray pack segment. Nonetheless, this is positive information that the company's total average pricing per pound is substantially below the Georgia Dock and USDA information.

Source: Sanderson Farms financials, USDA and personal database

A further comparison to the big bird deboning spot market commodity pricing categories also paints a positive picture. Only leg quarters were lower than Sanderson Farms' overall average net sales per pound.

We should also remember that leg quarters reflected the substantial, if not all frozen products, which was at six percent of revenue for fiscal-year 2015. But leg quarters were also available as a fresh product for further processors, so it should be assumed that the majority would be contained in the fresh bulk pack and/or chill pack product lines.

From here, the only way to truly compare Sanderson Farms to its five primary pricing indices is to breakout the company's pounds sold further. Additionally, we will need to consider what average prices to assume based on each poultry pounds sold category.

To make these price assumptions, we need some solid parameters. We have some stability by knowing quarterly net sales in total and by knowing the percentage split between poultry processed for tray pack and big bird deboning (which we can equate to poultry pounds sold). We also can obtain average spot market commodity pricing for any quarter and/or multiple quarters as a baseline for pricing. Most importantly, we also have chicken price manipulation allegations which can inform a scenario-based assessment for pricing.

Source: BMO Capital Markets 2016 Farm to Market Conference, May 2016

To clarify the percentage split between tray pack and big bird deboning, it is worth revisiting Sanderson Farms go-to slide entitled, favorable product mix. This slide is presented at almost every presentation, so we have a trend to pay attention to.

For those not familiar with how to interpret this slide, it is quite simple. The numbers to the left indicate the industry average operating margin, measured by cents per head. The cents per head measure is not so clear because most of the information we are dealing with is in pounds or price per pound. But considering total bird weights, these operating margins generally are around 20 to 10 percent, plus or minus, for tray pack and big bird deboning.

Through March of 2016, for fiscal-year 2016, Sanderson Farms disclosed an industry operating margin of around $0.40 per head for big bird deboning and $0.85 per head for tray pack per Agri Stats. Clearly, tray pack has been the higher margin product of late, but this has not always been the case until recently.

Source: Jefferies Consumer Conference, June 2016

When looking to the next presentation where this slide was available, both tray pack and big bird deboning displayed an increase in the industry average operating margin per head. The increase for big bird deboning is notable as it reflected a nearly 23 percent improvement from the previous month.

Source: Sanderson Farms Investors Day, October 2016

At the October 2016 Investor Day presentation, big bird deboning has clearly reduced the gap between tray pack. Based on this information, big bird deboning witnessed an over 50 percent improvement in industry average operating margin from March to October of 2016.

At the same time, tray pack witnessed a five percent decline over the same period. This is an important observation because the chicken pricing manipulation allegations claim that the spot market commodity pricing is the standard while the Georgia Dock is highly questionable.

While these allegations have been occurring, the industry has been witnessing substantially stronger improvement in big bird deboning versus tray pack. There is a thesis that tray pack's connection to the Georgia Dock would entail substantial net sales and margin impacts in the event the Georgia Dock were to be convicted of any wrongdoing, and/or prices were substantially reduced or the index were discontinued.

This is controversial as both Tyson Foods (NYSE:TSN) and Pilgrim's Pride Corporation (NYSE:PPC) continue to minimize the exposure to the Georgia Dock. Sanderson Farms on the other hand states that the company's retail customers rely upon it. We all know that Sanderson Farms is selling its product to the same customers as its top competitors.

But a recent article from the Wall Street Journal again provided further minimization of the Georgia Dock by Tyson Foods and Pilgrim's Pride. Tyson was quoted as saying:

"It will have no impact, if the Georgia Dock went away."

Source: Sanderson Farms financials and personal database

The correlation with the improved industry average big bird deboning operating margins over the past eight months or so looks to be clearly in line with Sanderson Farms' gross, operating and profit margin performance during the same period.

Analysts have recently raised both their net sales and earnings per share estimates for the fiscal-year 2016 upcoming fourth-quarter report through October. Looking back to the four categories of big bird deboning from the USDA data, spot market commodity pricing has improved and is likely the driver for improved industry average operating margins, including Sanderson Farms.

During this same time, the Georgia Dock has been in decline, albeit at a low-single-digit rate. Combined, we have the makings of a headwind-driven allegation, while operating margins are witnessing expansion, driven by improved spot market commodity pricing. These dynamics have the potential to increase the volatility levels for stock prices as these contrasting factors converge.

It is here that our interest returns to how Sanderson Farms is impacted by spot market commodity pricing and its retail customer long-term contracts. If we had detailed the invoice information and could see for ourselves the pricing contracts with one or two customers, the entire guilty by association connection with Sanderson could be entirely absolved, depending on bulk discount levels and other agreement terms. As quoted in the Wall Street Journal article by economist Jeffrey Dorfman:

"No matter how good an index you build, it will never perfectly capture prices because buyers and sellers don't want to reveal them."

Source: Australian Chicken Meat Federation

Referring to the poultry processed and sold table earlier, we need to make an important assumption to further deconstruct Sanderson Farms' poultry pounds sold. We already have management's percentage split for tray pack and big bird deboning through August of fiscal year 2016 at 42 and 58, respectively. We can take the three quarters for fiscal-year 2016's poultry pounds sold and split it by these numbers.

This gives us a breakout between retail and wholesale customers. More importantly, it separates the side of the business being scrutinized by the Georgia Dock allegations. But ideally, we would further separate the big bird deboning portion by the remaining four spot market commodity categories to have all five categories clearly identified.

This is where assumptions get a little complicated and it is better to be conservative. The graphic above reflects the Australian Chicken Meat Federation's attempt at compartmentalizing an average chicken weight by cuts. The information sourced a 1998 study with a caveat that changes in breeding and processing could leave this information a little stale. Basically, whether including skin or not, leg quarters (adding both the drumstick and thigh) yielded around 44 to 48 percent of the carcass weight.

Focusing on the leg quarter is important as it will allow us to separate the cheapest product from a spot market commodity pricing perspective. The remaining white meat parts can then have their weekly prices aggregated and averaged since they are much closer in pricing versus the leg quarters.

Source: USDA Agricultural Marketing Services, Commodity Specification, Chicken Parts, April 2013

Further review from a much more recent USDA commodity specification report has indicated that frozen chicken leg quarters reflected nearly 45 percent of the total carcass weight for ready-to-cook broiler/fryer chickens weighing 2.5 to 4 pounds. An assumption for leg quarters reflecting around 45 percent of the carcass weight is sufficient. This assumption will be used for the big bird deboning poultry pounds sold to separate the leg quarters from the white wings, tenders, and breast meat.

Source: Sanderson Farms financials, investor presentations and personal database

All information for poultry pounds sold, net sales and average price per pound includes Sanderson Farms' first three quarters of fiscal year 2016, running from November through July 2016. Total poultry pounds sold during this period reflected approximately 2.7 million.

Using management's percentage split, big bird deboning reflected approximately 1.6 million pounds and tray pack reflected approximately 1.2 million pounds. Including the 45 percent weight assumption for leg quarters within big bird deboning, pounds sold reflected approximately 715,000, and for white meat, pounds sold reflected approximately 874,000. It should be noted that prepared chicken pounds are not able to be broken out, but should be assumed in tray pack.

This breakout of poultry pounds sold establishes our ability to make pricing assumptions. Thinking back to the lower average price per pound for Sanderson Farms' net sales, it is tempting to generally think that the tray pack segment could have a lower pricing than the Georgia Dock, and that it could even be substantially lower.

To create a realistic assessment of potential spot market commodity pricing variations, beginning with the allegations for the chicken industry is the best place to start. The most important factor to consider based on the allegations is the connection with tray pack pricing declines leading to reduced net sales and profits. Critics have suggested that companies like Sanderson Farms are benefiting from the Georgia Dock's inflated pricing for their retail products.

Source: Sanderson Farms financials, presentations, USDA and personal database

*Note: Net sales and poultry pounds sold are for the 2016 fiscal year's first three quarters through July 2016. Product mix split between big bird deboning and tray pack was used from management's disclosed 58/42 percent split. Leg quarters poultry pound sold assumed a 45-55 percent split. All pricing was averaged using weekly USDA data over the same nine-month period.

The first place to start with is assuming long-term contract agreements are at parity with the Georgia Dock. The $1.10 per pound price was used to calculate the net sales for the nine-month period, which equated to approximately $1.1 billion, or 56 percent of the total.

Earlier estimates of impact to Sanderson Farms were based upon the simple viewpoint of the 42 percent poultry processed mix from the earlier slides. But when factoring in price, the exposure increases when assuming a one-to-one Georgia Dock relationship. It has been stated by management that Sanderson Farms' pricing tracks very close to the Georgia Dock.

The definition of very close is not clear. We all could have some degrees of different interpretation. I think all would agree five percent or less would be very close. Some would think 10 percent or less would be very close. And even others would think that 20 percent or less could still be stretched to being close, especially when speaking to aggregated magnitudes of product lines. Irrespective, Sanderson Farms' statements did not say "x" percent, which is what we want to know.

So, if a $1.10 per pound Georgia Dock price is assumed for tray pack, we need to determine what the remaining average price per pound would be for the leg quarters and white meat. Prepared chicken has been assumed to be at six percent of net sales kept as a constant for each scenario. Also, it should be noted that the average price for leg quarters during the nine-month period was $0.24 per pound and the average price for the remaining white meat categories was $1.09 per pound.

Simply plugging in these spot market commodity prices would yield a $350 million amount above the $2 billion in net sales for the period. It is not worth getting too much more complicated at this point. A trial-and-error method was used to determine a generally equivalent discount from the spot market commodity prices to attain the outstanding required $758 million in net sales gap.

To achieve this amount assuming a $1.10 Georgia Dock price, it would require a discount from the nine-month average spot market commodity prices of greater than 30 percent. From a short-term spot market contract perspective, this seems unlikely irrespective of any bulk purchases.

Source: Sanderson Farms financials, presentations, USDA and personal database

*Note: Net sales and poultry pounds sold are for the 2016 fiscal year's first three quarters through July 2016. Product mix split between big bird deboning and tray pack was used from management's disclosed 58/42 percent split. Leg quarters poultry pound sold assumed a 45/55 percent split. All pricing was averaged using weekly USDA data over the same nine-month period.

Since the spot market commodity prices have been lauded as the best reflection of pricing activity, especially versus the Georgia Dock, it could also be assumed that the nine-month average for spot market commodity prices should be used as the base.

The table above includes a straight assumption of leg quarters and white meat commodity pricing. Since all other product mix line items are filled with the only exception being tray pack, the net sales total was used to offset this gap from all other line items. The result yields an average price of $0.78 per pound for tray pack, roughly 29 percent below the current Georgia Dock level. This variation is far from management's very close statements.

It does not seem likely that the tray pack net sales percentage would dip below the actual poultry pounds sold, which is the case when taking the average nine-month spot market commodity prices at face value.

Source: Sanderson Farms financials, USDA and personal database

*Note: Net sales and poultry pounds sold are for the 2016 fiscal year's first three quarters through July 2016. Product mix split between big bird deboning and tray pack was used from management's disclosed 58/42 percent split. Leg quarters poultry pound sold assumed a 45/55 percent split. All pricing was averaged using weekly USDA data over the same nine-month period, assuming a 15 percent discount.

Assuming an evenly distributed 15 percent discount to both leg quarters and white meat would yield a similar nearly 15 percent discount for the tray pack line item versus the Georgia Dock. Some could still debate whether 15 percent falls under the very close statement made by Sanderson Farms.

But the reality is that pricing is most likely different than the Georgia Dock, at a lower level as well. The other important highlight is that spot market commodity pricing is also likely not precise. Referring to Sanderson Farms' net sales average per pound charts, it is encouraging to see that the company's pricing is well below most poultry spot market commodity indices.

What this exercise should uncover is that the complexities of these factors go far beyond the allegations which are currently presented. It is clear that not many outside of the chicken industry can have a solid grasp on invoice and contract prices, spot market commodity prices and make precise relationships to public company product segments. This is especially the case for Tyson Foods and Pilgrim's Pride as they disclose much less granular information.

In contrast to collusion price manipulation allegations, it would appear that the opposite has occurred as companies continue to attempt to defend their competitive positions.

Source: Sanderson Farms Investors Day, October 2016

Leading consulting firms like EMI among others continue to provide the Georgia Dock as a core component for retail tray pack pricing. This adds further contrast to critic allegations using supporting information picked and chosen from both Sanderson Farms and consultant commodity prices.

Source: Sanderson Farms Investors Day, October 2016

The information presented by EMI clearly provides its analysis and forecast for the Georgia Dock pricing out to 2017 at $1.09 per pound. These companies have extensive industry knowledge as well as a history with the Georgia Dock and spot market commodity pricing. While some argue about index discrepancies, these same industry experts who have the discrepancies continue to utilize the Georgia Dock themselves as a primary indicator. This is clearly the result of spot market versus contract differences.

Source: Sanderson Farms Investors Day, October 2016

Immediately following the Georgia Dock analysis, EMI provided its own monthly weighted average. Typically, the variation between birds below three pounds and above has been around 10 to 15 percent as published by Urner Barry. Judging by EMI's estimates for 2017, the monthly weighted average cents per pound would close out the year at around $0.80. This reflects a nearly 25 percent premium for the Georgia Dock through next year based on these estimates.


Source: Sanderson Farms financials, USDA, Georgia Dock and personal database

Sanderson Farms' net sales per pound have performed much more closely to the USDA weekly whole bird average for 2016 versus the Georgia Dock. The fourth-quarter net sales per pound are estimated from the company's assumed growth in poultry pounds sold versus last year.

The other clear factor is that there has been a direct correlation with the company's improved sales and operating margins resulting from the big bird deboning segment. This is clearly illustrated as Sanderson Farms' performance from the previous quarter and last year has contradicted both the Georgia Dock and the USDA whole bird indices. This has been a result of improved industry average operating margins via net sales from increased spot market commodity pricing for leg quarters and white meat.

The new piece of information to keep tabs on is the fact that the Georgia Dock will now be testing a new model. The Wall Street Journal reported that:

"Mr. Asbridge said the agency has already received affidavits from some of the participating companies. It is also testing a new model for collecting and reporting prices to replace the Georgia Dock in the coming months."

Also of note was the statements from Tyson Foods and other poultry processors which stated:

"They use it and other benchmarks in lieu of market prices in contract agreements with some grocery stores and other buyers, which commit to large purchases months in advance to ensure a steady supply of chicken for customers. In the low-margin supermarket business, paying fractions of pennies more or less per pound of meat at wholesale is typically passed on to consumers."

Whether investors and analysts like it or not, transparency is not present for the variation between the Georgia Dock and spot market commodity pricing. Neither is a clear reflection of aggregated invoices leading to net sales. What is clear for Sanderson Farms is that overall, the company's net sales per pound pricing is closer to spot market activity, which is in contrast to the allegations.

Based on this overview and the recent environment, it is highly likely that Sanderson Farms and other chicken producers will continue to witness stock price volatility. The primary tailwinds for Sanderson Farms relate to improving spot market commodity pricing for the big bird deboning segment. This is pit against a mixed picture for the Georgia Dock controversy. Allegations could serve as a headwind if they materialized into a tangible impact. But in the event they are without merit, a double-forced effect of tailwinds would likely drive Sanderson Farms' price substantially higher, possibly to new highs.

This situation suits risk takers very well for both sides of the coin. To date, shorts have taken the early lead as Sanderson Farms' stock price is down nearly 16 percent from October highs, purely a result of allegations. With expectations rising driven by improved big bird deboning pricing, and a revised Georgia Dock on the horizon, the game of chicken between longs and shorts will continue.

Disclosure: I am/we are long SAFM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.