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Pilgrim's Pride (PPC) Displays Solid Prospects, Risks Prevail

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We issued an updated research report on the premium consumer goods company – Pilgrim's Pride Corporation (PPC - Free Report) – on May 18.

Over the last one month, Pilgrim's Pride’s shares yielded a return of 2.52%, as against 4.28% loss incurred by the Zacks categorized Food - Meat Products industry.

Existing Scenario

Pilgrim's Pride has been steadily improving its top-line performance on the back of diversified product portfolio. The company believes that higher demand for organic and Antibiotic-Free chicken products would bolster its revenues in the quarters ahead.

Also, the GNP buyout (Jan 2017) is boosting its competency in the fully-cooked chicken products market. The company estimates to accrue annualized synergies worth $30 million on the back of this acquisition, higher than the prior estimation of $20 million.

In addition, operational efficacy of the company has been improving on the back of the better-than-expected ramp-up in many facilities during first-quarter 2017. Notably, Pilgrim’s Pride’s capital investments aimed toward strengthening customer relationships, product portfolio differentiation and margin profile expansion are anticipated to enhance its commercial strength, moving ahead.

However, this Zacks Rank #3 (Hold) stock faces a number of risks lingering in the industry. Outbreak of any livestock disease, like Avian Influenza, might cause severe supply chain challenges to the company. Furthermore, stiff industry rivalry and input price inflation are likely to limit near-term growth opportunities for the company.

Stocks to Consider

Some better-ranked stocks within the industry are listed below:

Ollie's Bargain Outlet Holdings, Inc. (OLLI - Free Report) delivered an average earnings surprise of 16.80% for the trailing four quarters and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aramark Holdings Corp (ARMK - Free Report) , which carries a Zacks Rank #2 (Buy) at present, pulled off an average earnings surprise of 4.45% over the last four quarters.

Conagra Brands, Inc. (CAG - Free Report) also carries a Zacks Rank #2 and delivered an average earnings surprise of 10.66% for the past four quarters.

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