Focusing on strategic growth initiatives like capacity expansions favors
Pilgrim's Pride Corporation ( PPC Quick Quote PPC - Free Report) . The company benefits from strength in its Mexico, Europe and U.S. operations. These aspects were evident in its second-quarter 2022 results, with the top and the bottom line surpassing the Zacks Consensus Estimate and rising year over year. Demand for Pilgrim's Pride’s products in overall retail and foodservice operations remained impressive. That being said, the leading poultry producer is not immune to the rising inflationary environment. Let’s delve deeper. What’s Working Well For Pilgrim's Pride?
Pilgrim’s Pride’s customer-centric approach helped it introduce unique offerings that provide competitive advantages. The company’s focus on key customers is a pathway for refining its portfolio and creating competitive advantages over its peers. Taking into account its focus on profitable growth and impressive market momentum, management made some new investments in the United States. Management is expanding the Athens, GA, facility to improve service levels and boost key customer growth.
The company intends to enhance operational excellence improvements via automation throughout its U.S. footprint and construct a protein conversion plant for pet food ingredients in Georgia. Pilgrim's Pride will develop a Prepared Foods facility in the Southeast USA to support branded growth and diversify its portfolio. Image Source: Zacks Investment Research
The Zacks Rank #3 (Hold) company has been steadily augmenting the 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. In this respect, it has been progressing well with developing automation technology for its processing plants. Introducing such advanced technology is expected to increase efficiency and aid in combating labor availability issues.
In sync with its growth strategy, Pilgrim’s Pride acquired Kerry Consumer Foods’ Meats and Meals business in the U.K. and Ireland in September 2021. The acquired business solidifies Pilgrim’s Pride’s footing by operating as a business division under the company’s European operations. The company’s disciplined capital allocation approach to diversify the portfolio, focus on key customers and achieve operational excellence bodes well.
Is All Rosy For Pilgrim's Pride?
Pilgrim's Pride has been grappling with an increased cost of sales for a while. During the second quarter of 2022, the company’s cost of sales increased to $3,954.9 million from $3,257.5 million reported in the year-ago quarter.
In its second-quarter earnings call, management noted that its European business witnessed major inflationary pressures. This and continued volatility from the Russia and Ukraine conflict led to softness in the region’s consumer environment in retail and foodservice. Although Pilgrim's Pride is implementing supply chain solutions among others, it cautioned about the rising pressures from inflation. Shares of Pilgrim's Pride have fallen 4.9% in the past three months compared with the industry’s 5.8% decline. Some Better-Ranked Food Bets
Some other top-ranked stocks are
The Chef's Warehouse ( CHEF Quick Quote CHEF - Free Report) , Nomad Foods ( NOMD Quick Quote NOMD - Free Report) and Celsius Holdings ( CELH Quick Quote CELH - Free Report) . Chef’s Warehouse, a distributor of specialty food products in the United States, currently flaunts a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 355.9%, on average. You can see . the complete list of today’s Zacks #1 Rank stocks here The Zacks Consensus Estimate for Chef Warehouse’s current financial year sales suggests growth of 40.7% from the year-ago reported numbers. Nomad Foods, which manufactures and distributes frozen foods, currently has a Zacks Rank of 2 (Buy). NOMD has a trailing four-quarter earnings surprise of 11.2%, on average. The Zacks Consensus Estimate for Nomad Foods’ current financial year sales suggests a decline of 2.6% from the year-ago period’s corresponding reported figures. Celsius Holdings, which develops, processes, markets, distributes and sells functional drinks and liquid supplements, carries a Zacks Rank #2 at present. Celsius Holdings delivered an earnings surprise of 118.8% in the last reported quarter. The Zacks Consensus Estimate for CELH’s current financial year sales suggests growth of 97.3% from the year-ago period’s reported figures.