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Pilgrim’s Pride (PPC - Free Report) , rated as a Zacks Rank #1 (Strong Buy), is a leading player in the production, processing, marketing, and distribution of fresh, frozen, and value-added chicken and pork offerings to a wide range of clients, including retailers, distributors, and food service operators.
The stock is trading near 52-week highs after beating earnings last week. The stock is trading up about 30% on the year, but there appears to be more meat on the bone as the stock approaches decade-long resistance.
Investors should keep a close eye on the stock for potential upward movement in the near term, with the possibility of a longer-term breakout looming on the horizon.
More about Pilgrim’s Pride
Pilgrim's Pride was established in 1946 and is headquartered in Greeley, Colorado. The company boasts a workforce exceeding 61,000 individuals and commands a market capitalization of $8.5 billion.
The company offers a diverse array of products under various brands such as Pilgrim's, Just BARE, Gold'n Pump, and more.
Specializing in chicken products, Pilgrim's Pride operates both as a producer and a seller, catering to markets in the United States, the United Kingdom, Europe, and Mexico. Its operations are structured into three distinct business segments: the United States (accounting for 57.8% of 2024 sales), Europe (30%), and Mexico (12.3%).
The stock has Zacks Style Scores of “A” in Value, Growth, and Momentum. It has a Forward PE of 10 and pays no dividend.
Q1 Earnings
Last week, Pilgrim’s Pride reported Q1 with a 28% earnings surprise to the upside. This was the ninth straight earnings beat for PPC, which has not missed earnings expectations since late 2021.
The company indicated a substantial improvement over the previous year, with earnings per share coming in at $0.77 compared to $0.08 in the same period last year. Additionally, revenue increased to $4.36 billion from $4.17 billion year-on-year.
Adjusted EBITDA also saw a significant rise, reaching $371.9 million compared to $151.9 million in the previous year, with a notable increase in margin from 3.6% to 8.5%.
Management highlighted challenges faced due to market conditions and consumer inflation in 2023 but emphasized how the company leveraged these circumstances to enhance its competitive edge. Through consistent execution of strategies, focusing on controllable factors, and continued investment in operations, the company managed to strengthen its position, accelerating profitable growth despite evolving market conditions.
Estimates Trend Higher
Looking at earnings estimates, we don't have much data for the upcoming quarters. However, the move higher in estimates over the long-term is very positive.
For the current year, we see analysts hiking estimates since earnings. For the last 7 days, numbers have been taken from $3.01 to $3.51, an up move of 16%.
Next year the numbers continue to move higher, with estimates going from $3.09 to $3.47, up 12%.
Shortly after earnings, BMO capital markets took their price target from $38 to $42.
The Technical Take
The stock has been stuck in a large trading range since 2014. The $15-20 area has been technical support, while the $35-40 area has been resistance.
Considering the recent earnings momentum, it looks like the PPC finally has a chance at breaking this long-term resistance and shooting past the $41 all-time highs set in 2007.
For those looking for an entry on any pullback, below are some levels to watch:
21-day Moving Average (MA): $35.80
50-day MA: $34.50
200-day MA: $28.00
Outside an erratic down move after the earning release, that 21-day MA has been holding up very well. The stock has not traded below that level since February, so short-term traders might be able to lean against that level.
Because of the positive price reaction since earnings, the bulls might not allow buy-the-dip investors to get an entry. Aggressive longs should look for $42.70 as targets, which is the 161.8% Fibonacci extension found by drawing 2022 highs to 2023 lows.
In Summary
Pilgrim’s Pride has emerged as a compelling investment opportunity, backed by strong financial performance, strategic resilience, and positive market sentiment.
With a track record of consistent earnings beats and a favorable outlook for future growth, PPC stands poised to capitalize on its market position and drive shareholder value.
As it navigates evolving market dynamics and approaches key resistance levels, investors may find potential for further upside in the stock, making it one to watch closely in the coming months.
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Bull of the Day: Pilgrim's Pride (PPC)
Pilgrim’s Pride (PPC - Free Report) , rated as a Zacks Rank #1 (Strong Buy), is a leading player in the production, processing, marketing, and distribution of fresh, frozen, and value-added chicken and pork offerings to a wide range of clients, including retailers, distributors, and food service operators.
The stock is trading near 52-week highs after beating earnings last week. The stock is trading up about 30% on the year, but there appears to be more meat on the bone as the stock approaches decade-long resistance.
Investors should keep a close eye on the stock for potential upward movement in the near term, with the possibility of a longer-term breakout looming on the horizon.
More about Pilgrim’s Pride
Pilgrim's Pride was established in 1946 and is headquartered in Greeley, Colorado. The company boasts a workforce exceeding 61,000 individuals and commands a market capitalization of $8.5 billion.
The company offers a diverse array of products under various brands such as Pilgrim's, Just BARE, Gold'n Pump, and more.
Specializing in chicken products, Pilgrim's Pride operates both as a producer and a seller, catering to markets in the United States, the United Kingdom, Europe, and Mexico. Its operations are structured into three distinct business segments: the United States (accounting for 57.8% of 2024 sales), Europe (30%), and Mexico (12.3%).
The stock has Zacks Style Scores of “A” in Value, Growth, and Momentum. It has a Forward PE of 10 and pays no dividend.
Q1 Earnings
Last week, Pilgrim’s Pride reported Q1 with a 28% earnings surprise to the upside. This was the ninth straight earnings beat for PPC, which has not missed earnings expectations since late 2021.
The company indicated a substantial improvement over the previous year, with earnings per share coming in at $0.77 compared to $0.08 in the same period last year. Additionally, revenue increased to $4.36 billion from $4.17 billion year-on-year.
Adjusted EBITDA also saw a significant rise, reaching $371.9 million compared to $151.9 million in the previous year, with a notable increase in margin from 3.6% to 8.5%.
Management highlighted challenges faced due to market conditions and consumer inflation in 2023 but emphasized how the company leveraged these circumstances to enhance its competitive edge. Through consistent execution of strategies, focusing on controllable factors, and continued investment in operations, the company managed to strengthen its position, accelerating profitable growth despite evolving market conditions.
Estimates Trend Higher
Looking at earnings estimates, we don't have much data for the upcoming quarters. However, the move higher in estimates over the long-term is very positive.
For the current year, we see analysts hiking estimates since earnings. For the last 7 days, numbers have been taken from $3.01 to $3.51, an up move of 16%.
Next year the numbers continue to move higher, with estimates going from $3.09 to $3.47, up 12%.
Shortly after earnings, BMO capital markets took their price target from $38 to $42.
The Technical Take
The stock has been stuck in a large trading range since 2014. The $15-20 area has been technical support, while the $35-40 area has been resistance.
Considering the recent earnings momentum, it looks like the PPC finally has a chance at breaking this long-term resistance and shooting past the $41 all-time highs set in 2007.
For those looking for an entry on any pullback, below are some levels to watch:
21-day Moving Average (MA): $35.80
50-day MA: $34.50
200-day MA: $28.00
Outside an erratic down move after the earning release, that 21-day MA has been holding up very well. The stock has not traded below that level since February, so short-term traders might be able to lean against that level.
Because of the positive price reaction since earnings, the bulls might not allow buy-the-dip investors to get an entry. Aggressive longs should look for $42.70 as targets, which is the 161.8% Fibonacci extension found by drawing 2022 highs to 2023 lows.
In Summary
Pilgrim’s Pride has emerged as a compelling investment opportunity, backed by strong financial performance, strategic resilience, and positive market sentiment.
With a track record of consistent earnings beats and a favorable outlook for future growth, PPC stands poised to capitalize on its market position and drive shareholder value.
As it navigates evolving market dynamics and approaches key resistance levels, investors may find potential for further upside in the stock, making it one to watch closely in the coming months.