Pilgrim’s Pride Corporation (PPC Quick QuotePPC - Free Report) reported third-quarter 2026 results, wherein both the top and bottom lines declined year over year but surpassed the Zacks Consensus Estimate.

PPC posted adjusted earnings of 49 cents per share, down 67.8% year over year but ahead of the consensus estimate of 48 cents. Net sales declined 2.2% year over year to $4,653.2 million but exceeded the consensus estimate of $4,600 million.

Increased U.S. chicken supplies weighed on commodity cutout values and pressured profitability. However, U.S. Prepared Foods volumes rose more than 15% year over year, reflecting continued momentum in the company's differentiated product portfolio.

Pilgrim's Pride Corporation Price, Consensus and EPS Surprise

Pilgrim's Pride Corporation price-consensus-eps-surprise-chart | Pilgrim's Pride Corporation Quote

PPC's Q3 Profitability and Cost Performance

Gross profit declined 49.4% year over year to $333.7 million from $659.4 million. Cost of sales increased 5.4% to $4,319.5 million from $4,100 million. Consequently, the gross margin contracted to 7.2% from 13.9% in the prior-year quarter.

Selling, general and administrative expenses decreased 13.8% year over year to $142.2 million from $165 million. Operating income fell 61.1% to $191.5 million from $492.6 million, while the GAAP operating margin narrowed to 4.1%.

Adjusted EBITDA declined 50% year over year to $316.3 million from $633.1 million. The adjusted EBITDA margin contracted 650 basis points to 6.8% from 13.3%, reflecting lower profitability across the company's three geographic segments.

Pilgrim's U.S. Business Faces Commodity Pressure

U.S. sales declined 5.5% year over year to $2,680.1 million from $2,836.6 million. Adjusted operating income decreased 73.8% to $105.8 million from $403.7 million. The adjusted operating margin contracted to 3.9% from 14.2% in the year-ago quarter.

U.S. Fresh experienced pressure from increased chicken supplies, with USDA data cited by the company indicating a 2.2% year-over-year supply increase that outpaced demand growth. Lower commodity cutout values weighed on performance, although volumes remained stable sequentially.

Case Ready maintained its retail presence through expanded distribution and promotional investments with key customers. Small Bird demand remained firm, supported by consumer interest in boneless chicken offerings at leading quick-service restaurants. Improvements in live operations and yield efficiencies helped partly offset lower commodity cutout values.

PPC's Europe Operations Navigate Cost Headwinds

Europe sales declined 1.3% year over year to $1,374.0 million from $1,392.5 million. Adjusted operating income fell 11% to $63.4 million from $71.3 million. The adjusted operating margin narrowed to 4.6% from 5.1% in the prior-year quarter.
Consumer demand for affordable poultry and convenient meals remained supportive, although reported regional sales declined year over year. Branded products, including Fridge Raiders and Rollover, continued to grow, with additional promotional activities and distribution providing further opportunities.

However, excess pork imports from European countries and sustained increases in input costs pressured margins. Pilgrim's continued investing in its poultry supply chain, while the approval process for the pending Walkers Deli & Sausage acquisition progressed, with closing anticipated in early 2027.

Pilgrim's Mexico Sales Grow Despite Margin Pressure

Mexico sales increased 13% year over year to $599.1 million from $530.2 million. However, adjusted operating income decreased 42.8% to $22.3 million from $39 million. The adjusted operating margin narrowed to 3.7% from 7.4% in the year-ago quarter.

Profitability improved sequentially as live commodity market conditions strengthened, despite substantial protein availability across Mexico. Retail volumes with key customers increased more than 8% year over year.

Branded fresh offerings remained a growth driver, with retail sales increasing more than 40%. Just Bare retail fresh volumes more than doubled, while Pilgrim's and Alamesa prepared foods brands registered double-digit growth. The ramp-up of operations in the Merida region and Southern Peninsula remained on schedule.

PPC's Prepared Foods Investments Support Growth

U.S. Prepared Foods delivered higher sales and margins compared with the prior-year period. Just Bare retail sales increased more than 25%, while its volume market share in the frozen fully cooked chicken category expanded more than 300 basis points year over year.

Product innovation also supported the business, including the introduction of Pilgrim's Flamin' Hot offerings across retail and foodservice channels.

Construction of the new prepared foods facility in Walker County, GA, remained on track, with commissioning expected in the second half of 2027. The company also continued investing in its Ellijay, GA, facility to expand its presence in the small bird deboning segment.

Pilgrim's Liquidity and Financial Position

Pilgrim's ended the quarter with cash and cash equivalents of $935.8 million, up from $640.2 million at the end of 2025. Long-term debt, excluding current maturities, stood at $3,404.7 million, while total stockholders' equity was $3,887.9 million.

Cash provided by operating activities totaled $684.2 million during the first nine months of 2026, compared with $1,080.4 million in the prior-year period. Capital expenditures reached $682.1 million compared with $441.1 million a year earlier.

The company's net leverage ratio stood at 1.76 times adjusted EBITDA, below its targeted range of 2-3 times. Management remained focused on improving operating efficiency, diversifying its product portfolio and investing in capacity to support future growth.

This Zacks Rank #5 (Strong Sell) stock has plunged 20.3% in the past six months compared with the industry’s 15.6% decline.

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