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Will Pilgrim's Pride's (PPC) Q2 Earnings Grow Amid Hurdles?
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Pilgrim's Pride Corporation (PPC - Free Report) is scheduled to release second-quarter 2018 results on Aug 2. Though the company delivered a negative earnings surprise of 1.9% in the last reported quarter, it has outperformed the Zacks Consensus Estimate by an average of 11.1% over the trailing four quarters.
Pilgrim's Pride Corporation Price and EPS Surprise
Let’s delve deep and see what’s in store for the company this time around.
Factors Impacting the Quarter
Pilgrim's Pride is likely to continue gaining from strength in Mexico and Europe businesses, which fueled its top line in the last reported quarter. In the first quarter of 2018, Pilgrim's Pride generated net revenues of $2,746.7 million, up 10.8% year over year. Revenues from U.S. operations improved in the reported quarter on account of stellar performance of case-ready and small bird businesses. Also, robust demand for both Pilgrim’s Pride’s and Del Dia’s chicken products, as well as rise in disposable income levels helped boost Mexican sales during the reported quarter. Given a strong first quarter and favorable second-quarter trends, management expects Mexico to deliver a solid performance in 2018. This is because the increased disposable income in the country is likely to bolster chicken consumption.
Further, the company’s European top-line performance strengthened during the first quarter, backed by the successful integration activities of the Moy Park buyout (closed in September 2017). Notably, Pilgrim's Pride has been gradually strengthening its competency on the back of strategic business acquisitions. Apart from Moy Park, the company’s acquisition of GNP Company (January 2017) is also likely to augment the company's sales in the upcoming quarters.
However, increased demand for plant-based protein may dampen revenues and profitability of Pilgrim’s Pride. Incidentally, global demand for meat-based protein products is negatively impacted by increased production and consumption related regulatory control. Moreover, the medical community is promoting plant-based protein products over the meat-based ones, on account of health risks. Moving to the cost front, volatile commodity costs may hit the bottom line. Pilgrim’s Pride witnessed commodity price inflation of corn and soybeans in the first quarter of 2018. Corn prices rose since January, owing to higher export demand and lower expected corn production in Argentina. Further, soybean prices shot up since January, on account of crop losses in Argentina. The potential trade war with China has also been causing excess volatility in soybean prices, as China accounts for a large chunk of soybean export demand.
What to Expect?
Though these hurdles make us somewhat cautious about Pilgrim's Pride’s upcoming earnings announcement, we expect its solid revenue-drivers to provide adequate cushion. Also, focus on cost cutting and cost optimization should help the company tide over these headwinds and fuel growth.
The Zacks Consensus Estimate for Pilgrim's Pride earnings has remained stable over the past 30 days at 96 cents per share, which shows a 3.2% increase from the year-ago period figure. Further, the Zacks Consensus Estimate for sales of $2,884 million indicates year-over-year growth of nearly 28%.
What Does the Zacks Model Unveil?
Our proven model doesn’t show thatPilgrim's Pridecan beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Pilgrim's Pride’s Zacks Rank #5 (Strong Sell) and Earnings ESP of 0.00% reduce the chances of earnings beat to a great extent.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post earnings beat:
Estee Lauder (EL - Free Report) has an Earnings ESP of +1.31% and a Zacks Rank of 3.
Molson Coors (TAP - Free Report) has an Earnings ESP of +0.29% and a Zacks Rank of 3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Will Pilgrim's Pride's (PPC) Q2 Earnings Grow Amid Hurdles?
Pilgrim's Pride Corporation (PPC - Free Report) is scheduled to release second-quarter 2018 results on Aug 2. Though the company delivered a negative earnings surprise of 1.9% in the last reported quarter, it has outperformed the Zacks Consensus Estimate by an average of 11.1% over the trailing four quarters.
Pilgrim's Pride Corporation Price and EPS Surprise
Pilgrim's Pride Corporation Price and EPS Surprise | Pilgrim's Pride Corporation Quote
Let’s delve deep and see what’s in store for the company this time around.
Factors Impacting the Quarter
Pilgrim's Pride is likely to continue gaining from strength in Mexico and Europe businesses, which fueled its top line in the last reported quarter. In the first quarter of 2018, Pilgrim's Pride generated net revenues of $2,746.7 million, up 10.8% year over year. Revenues from U.S. operations improved in the reported quarter on account of stellar performance of case-ready and small bird businesses. Also, robust demand for both Pilgrim’s Pride’s and Del Dia’s chicken products, as well as rise in disposable income levels helped boost Mexican sales during the reported quarter. Given a strong first quarter and favorable second-quarter trends, management expects Mexico to deliver a solid performance in 2018. This is because the increased disposable income in the country is likely to bolster chicken consumption.
Further, the company’s European top-line performance strengthened during the first quarter, backed by the successful integration activities of the Moy Park buyout (closed in September 2017). Notably, Pilgrim's Pride has been gradually strengthening its competency on the back of strategic business acquisitions. Apart from Moy Park, the company’s acquisition of GNP Company (January 2017) is also likely to augment the company's sales in the upcoming quarters.
However, increased demand for plant-based protein may dampen revenues and profitability of Pilgrim’s Pride. Incidentally, global demand for meat-based protein products is negatively impacted by increased production and consumption related regulatory control. Moreover, the medical community is promoting plant-based protein products over the meat-based ones, on account of health risks. Moving to the cost front, volatile commodity costs may hit the bottom line. Pilgrim’s Pride witnessed commodity price inflation of corn and soybeans in the first quarter of 2018. Corn prices rose since January, owing to higher export demand and lower expected corn production in Argentina. Further, soybean prices shot up since January, on account of crop losses in Argentina. The potential trade war with China has also been causing excess volatility in soybean prices, as China accounts for a large chunk of soybean export demand.
What to Expect?
Though these hurdles make us somewhat cautious about Pilgrim's Pride’s upcoming earnings announcement, we expect its solid revenue-drivers to provide adequate cushion. Also, focus on cost cutting and cost optimization should help the company tide over these headwinds and fuel growth.
The Zacks Consensus Estimate for Pilgrim's Pride earnings has remained stable over the past 30 days at 96 cents per share, which shows a 3.2% increase from the year-ago period figure. Further, the Zacks Consensus Estimate for sales of $2,884 million indicates year-over-year growth of nearly 28%.
What Does the Zacks Model Unveil?
Our proven model doesn’t show thatPilgrim's Pridecan beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Pilgrim's Pride’s Zacks Rank #5 (Strong Sell) and Earnings ESP of 0.00% reduce the chances of earnings beat to a great extent.
Stocks Poised to Beat Earnings Estimates
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post earnings beat:
Dean Foods , a Zacks #3 Ranked company, has an Earnings ESP of +11.63%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Estee Lauder (EL - Free Report) has an Earnings ESP of +1.31% and a Zacks Rank of 3.
Molson Coors (TAP - Free Report) has an Earnings ESP of +0.29% and a Zacks Rank of 3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>