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Why Is Pilgrim's Pride (PPC) Up 5.2% Since Last Earnings Report?

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It has been about a month since the last earnings report for Pilgrim's Pride (PPC - Free Report) . Shares have added about 5.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Pilgrim's Pride due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Pilgrim's Pride Q1 Earnings Outperform Estimates

Pilgrim’s Pride reported first-quarter 2023 results, with both the top line and the bottom line deteriorating from the year-ago quarter’s level. Nevertheless, the company’s earnings surpassed the Zacks Consensus Estimate.

The company’s portfolio diversification strategies, operational excellence and Key Customer partnerships have been driving growth. However, persistent inflation, elevated grain pricing and depressed commodity values were headwinds. 

Q1 in Detail

The company reported adjusted earnings of 8 cents a share, which surpassed the Zacks Consensus Estimate of adjusted loss of 1 cent. However, the bottom line deteriorated from earnings of $1.18 per share reported in the year-ago quarter.

The producer, marketer and distributor of fresh, frozen and value-added chicken and pork products generated net sales of $4,165.6 million, which dipped 1.8% from the year-ago quarter’s level. Net sales increased in Europe and Mexico operations.

Net sales in the U.S. operations were $2,432.6 million, down from $2,581.2 million reported in the year-ago quarter. Management highlighted that its commodity business in the United States remained extremely challenging, particularly in January. Although its varied portfolio of products across bird sizes and branded offerings lessened market effects, its performance was improved by its intense focus on operational excellence. Management is on track with investments in expansion at the Athens, GA plant, construction of a protein conversion plant in South Georgia and several automation projects to enhance its portfolio.

Mexico operations generated net sales of $493.8 million in the reported quarter, up from $467.2 million in the prior-year quarter. Pilgrim's Pride’s Mexico business witnessed improved results throughout the quarter, with market conditions improving sequentially. Its operations also recovered from the live challenges.

Net sales from Europe operations rose to $1,239.3 million in the quarter under review from $1,192 million in the prior year. The company’s U.K. and Europe businesses gained from continued focus on driving scale, investments in network optimization and cost synergies across its businesses, which also resulted in consistent growth in adjusted EBITDA 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. Gross profit slumped to $173 million from $542 million. Adjusted EBITDA of $151.9 million decreased from $501.8 million reported in the year-ago quarter. Adjusted EBITDA margin of 3.6% contracted from 11.8% reported in the year-ago quarter.

Other Financial Details

The company ended the quarter with cash and cash equivalents of almost $150.7 million, long-term debt (less current maturities) of $3,196.6 million and total shareholders’ equity of $2,906.5 million. The company used $161.7 million of cash from operating activities for year ended Mar 26, 2023.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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