Focus on strategic growth initiatives including capacity expansions and prudent marketing strategies are working in favor of Pilgrim's Pride Corporation (PPC Quick QuotePPC - Free Report) . The company has been benefiting from solid growth in Mexico and gradual revival of U.S. operations. These were reflected in its second-quarter 2021 results, with the top and the bottom line increasing year over year.

The currently Zacks Rank #2 (Buy) stock has increased 24.6% in the past three months against the industry’s 6% decline.

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Focus on Growth Initiatives

Pilgrim's Pride’s customer-centric approach has helped it come up with unique offerings that provide competitive advantages. The company’s focus on key customers is a pathway for refining its portfolio as well as creating competitive advantages over its peers, especially amid the pandemic. Management had announced a number of projects in 2020 to support growth of its key customers. It has been focused on doubling the case-ready capacity in its Cold Spring, Minnesota plant. Also, Pilgrim's Pride is increasing the mix of more stable margin case-ready items. Management had earlier stated that it is converting a commoditized large bird deboning plant to effectively support solid demand from a key customer QSR in the small bird segment.

Pilgrim's Pride has been steadily augmenting marketing support of its brands, as they expand and enter new regions. It resorts to frequent supply chain improvements to enhance efficiency and reduce costs. Management has been progressing well with the development of the automation technology for its processing plants. The introduction of such advanced technology is expected to increase efficiency and help the company combat labor-availability issues.

Pilgrim’s Pride’s dedicated efforts, including zero-base budgeting and positive impacts from the acquisitions, are expected to create synergies. In sync with its growth strategy, Pilgrim's Pride expects to acquire Kerry Consumer Foods' Meats and Meals business in the U.K. and Ireland. The buyout will help it solidify its position with an important value-added protein and integrated prepared foods business. Management expects to close the transaction in the beginning of the fourth quarter.

Solid Performance

During second-quarter 2021, Pilgrim's Pride witnessed sales growth across Mexico, the U.K. and Europe as well as the United States, which drove the company’s top-line performance. Pilgrim's Pride continues to witness rebound in demand in the United States, with foodservice business improving on a year-over-year basis as well as sequentially. Its Retail volumes in the region were solid. The company’s branded consumer packaged foods business saw significant growth on the back of brand investments. Commodity large bird deboning operation was sturdy, despite higher input costs and lower-than-optimal mix.

The Mexican operations benefited from a better economic environment, strong execution, balanced supply/demand scenario and an increase in share of non-commodity products. The company stated that its combined European business gained on operational improvements and rebound in foodservice volumes in the U.K., that were countered by high feed costs as well as lower pig pricing.

We believe that Pilgrim's Pride is likely to keep gaining from solid regional performances as well as its strategic growth initiatives.

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