Focus on strategic growth efforts, including capacity expansions, are favoring
Pilgrim’s Pride Corporation ( PPC Quick Quote PPC - Free Report) . The leading poultry producer benefits from its focus on key customers. The company is benefiting from the recovery in Foodservice business. However, Pilgrim’s Pride is not immune to the rising inflationary environment. Let’s delve deeper. Image Source: Zacks Investment Research What Driving Pilgrim’s Pride’s Growth?
The Zacks Rank #3 (Hold) company's customer-centric approach has propelled it to come up with unique offerings that provide competitive advantages. Its focus on key customers is a pathway for refining its portfolio and creating competitive advantages over its peers. In this regard, management undertook several sessions to find ways to counter inflationary headwinds for key customers. The company has been optimizing the manufacturing network integrating back-office activities.
Taking into account Pilgrim's Pride’s focus on profitable growth and impressive market momentum, management had earlier unveiled some new investments in the United States. In its last earnings call, management highlighted that it is on track with the expansion in Athens, Georgia, aimed at supporting key customer growth. The company’s investments to support operational excellence via automation and new protein conversion plants in South Georgia are on track. Management highlighted that the footprint expansion in the Yucatan Peninsula is progressing as planned, with production coming online in the second half of 2023. Apart from this, 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. In this respect, it has been progressing with the development of automation technology for its processing plants. Management is on track with a disciplined capital allocation approach to diversify the portfolio, focus on key customers and achieve operational excellence. The company is focused on investing in high return on capital employed projects. It continues to look for M&A opportunities to further diversify its portfolio in segments and geographies. The company is progressing with embed automation throughout the production units. Cost Woes
Pilgrim's Pride’s first-quarter 2023 results were hurt by persistent inflation, escalated grain pricing and depressed commodity values. In its last earnings call, management highlighted that it witnessed dramatic inflation throughout the supply chain, including grain inputs, labor and utilities and other distinct challenging economic conditions in every region. During the quarter, Pilgrim's Pride’s cost of sales increased to $3,992.6 million from $3,698.4 million reported in the year-ago quarter.
That said, the abovementioned upsides are likely to keep PPC afloat amid such hurdles. Shares of Pilgrim's Pride have fallen 7.9% in the past three months compared with the industry’s 15.1% decline. Other Solid Consumer Staple Picks
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The Chef's Warehouse ( CHEF Quick Quote CHEF - Free Report) , General Mills ( GIS Quick Quote GIS - Free Report) and Conagra Brands ( CAG Quick Quote CAG - Free Report) . The Chef's Warehouse, which distributes specialty food products, currently sports a Zacks Rank #1 (Strong Buy). Chef's Warehouse has a trailing four-quarter earnings surprise of 33.8%, on average. You can see . the complete list of today’s Zacks #1 Rank stocks here The Zacks Consensus Estimate for CHEF’s current financial year sales and earnings suggests growth of 25.5% and 7.1%, respectively, from the year-ago reported figures. General Mills, a branded consumer food company, currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average. The Zacks Consensus Estimate for General Mills’ current fiscal year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the year-ago reported figures. Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average. The Zacks Consensus Estimate for Conagra Brands’ current fiscal year sales and earnings suggests an improvement of 7.1% and 16.5%, respectively, from the year-ago reported number.