Pilgrim's Pride Corporation (PPC Quick QuotePPC - Free Report) has been benefiting from solid growth in Mexico and gradual revival of U.S operations. The company is undertaking strategic growth initiatives like capacity expansions and prudent marketing strategies among others.

Owing to these upsides, shares of the Zacks Rank #2 (Buy) company have surged 40.1% so far this year compared with the industry’s 12.3% growth. The stock has comfortably outpaced the Zacks Consumer Staples sector’s growth of 5.5%.

Let’s take a closer look.

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Solid Performance Across Regions

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 top-line performance. The company 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.

Mexican operations benefited from better economic environment, strong execution, balanced supply/demand scenario and increased share of non-commodity products. The company highlighted 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.

Strategic 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 alongside 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. The company 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 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. Well, management has been progressing well with developing automation technology for its processing plants. Introduction of such advanced technology is expected to increase efficiency and help combat labor-availability issues.

Moreover, the company’s dedicated efforts, including zero-base budgeting and positive impacts from acquisitions, are expected to create synergies. In line with its growth strategy, Pilgrim's Pride’s 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.

We believe that Pilgrim's Pride will keep gaining from such well-chalked out strategies coupled with solid growth across all regions, in which it operates.

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