Pilgrim's Pride Corporation (PPC - Free Report) is scheduled to report first-quarter 2018 results on Apr 10, after the market closes.
The company reported better-than-expected results in three of the last four quarters, while lagging in one. Average earnings surprise was a positive 8.62%. Notably, in the last reported quarter, the company’s earnings of 58 cents per share surpassed the Zacks Consensus Estimate by 9.43%.
In the last three months, the company’s shares have declined 16.4%, worse than the 5.3% decline of the industry it belongs to.
Let us see how things are shaping up for the company prior to this announcement.
Factors to Influence Q1 Results
Pilgrim's Pride faces a number of headwinds, which, if materialize, might prove detrimental to its financial performance. Foremost is the supply constraint of intermediate inputs, including corn, soybean and sorghum. Also, a sudden surge in costs of these inputs can put pressure on the product margin.
In addition, the company is not immune to risks arising from international operations. For instance, expired import quotas in some overseas markets, supply-chain setbacks in Mexico, commodity-cost inflation in the European end-markets, and unfavorable foreign-currency movements might impact operations/financials adversely. Moreover, a sudden outbreak of livestock diseases within the meat industry can influence import and export policies of fresh chicken products of the governments of the nations served.
Furthermore, intense competition in the industry makes heavy investments in innovative and growth projects an imperative for Pilgrim's Pride. This, in some cases, results in rising debt burden and financial obligations.
However, these negative aspects are partially offset by rising demand for organic chicken products, driven by increased protein-based dietary habits and rising disposable income levels. Also, to leverage benefits from rising product demand, Pilgrim's Pride is offering new products to its customers under popular brands like Just Bare.
Stronger productivity of the Moorefield, WV-facility, sturdy ramp-up of the Vera Cruz facility, diligent cost-saving initiatives, greater operational excellence and reduced corporate tax rates are expected to be a boon. Also, successful integrations of GNP Company (acquired in January 2017) and Moy Park (acquired in September 2017) will generate more synergies in the upcoming quarters.
Our proven model provides some idea about the stocks that are about to release their earnings results. Per the model, a stock needs a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for a likely earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The case with Pilgrim's Pride has been provided below.
Zacks ESP: Pilgrim's Pride has an Earnings ESP of +4.67%, with the Most Accurate estimate of 56 cents exceeding the Zacks Consensus Estimate of 54 cents.
Pilgrim's Pride Corporation Price and EPS Surprise