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Pilgrim's Pride Corporation Message Board

netlosstoo 34 posts  |  Last Activity: Jan 25, 2016 3:40 PM Member since: Feb 24, 2003
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  • Reply to

    CALM has half a billion in cash

    by chillb67 Jan 20, 2016 2:48 PM
    netlosstoo netlosstoo Jan 25, 2016 3:40 PM Flag

    CALM might purchase about 240m dozens from third parties in the coming year.

    This represents the production of more than 10m hens.

    CALM makes very little if any on these egg sales

    Why should CALM subsidize these producers, when CALM has the relationship with the retailer?

    No one wants to sell because egg prices are good and CALM isn?t the only producers sitting on a ton of cash.

    So ? CALM must expand ? or continue to be held hostage by third party egg producers asking very high prices for eggs.

    For CALM to expand five or 10m more hens would cause industry pain ? but in the long run it would force marginal producers to sell out or get out of the business to the benefit of CALM.

    CALM expanded its hen count tremendously in the 1990?s and early 2000?s when egg prices were #$%$ and the industry was in max pain mode ?. This expansion paid off many many times over when prices once again improved.

    No pain ? no gain

  • Reply to

    Rebuilding the hen flock

    by netlosstoo Nov 5, 2015 7:07 PM
    netlosstoo netlosstoo Jan 25, 2016 3:11 PM Flag

    January 1 table laying hens are at 288.1 ... so industry is starting to accelerate hen replacement from the bird flu ... egg type December hatch was 47.3m a healthy increase from 44.1m Jan of 2015 ... the industry should easily be back to 305m hens by May 1 barring addt'l bird flu ... then what?

    Was a bit surprised by the 41 cent uptick in egg prices for this week ... were people buying a ton of eggs in preparation for the east coast storm? ... must be more than that as the undertone is still higher

  • Reply to

    CALM has half a billion in cash

    by chillb67 Jan 20, 2016 2:48 PM
    netlosstoo netlosstoo Jan 24, 2016 6:30 PM Flag

    For $100m CALM could buy back about 4% of the stock

    or

    for $100m CALM could add about 3.3m hens or add 8% more capacity

    Advantages to each

    I assumed it might cost about $30 per hen to expand ... generics might be a bit cheaper to add ?... cage free more?

    If anyone knows how much it costs to add hen capacity i'd be interested in knowing

  • netlosstoo by netlosstoo Jan 20, 2016 9:54 PM Flag

    First the cookies were much better this year than last and they didn’t run out.
    Here are my meeting notes:
    - Increasing dividend to 14 cents from 13
    - $3.1 B in new loan originations …mostly commercial (this was a quite a bit more than recent years)
    - $9.2B of net loans … up 10% … 58% single family residential … 4.45% weighted avg. interest rate
    - Very low delinquency rate … had net loan RECOVERIES of $5m this year
    - 55% of deposits now lower cost transactional deposits … up from about 51% last year if I remember right
    - 11th out of top 100 U.S. banks in tangible equity to asset ratio of about 11%
    - Other income has increased as more fees are earned. Roy emphasized that in no way were these fees “gouging” lower net worth depositors … he stated they are not interested in earning money on overdraft fees … and will call people in to help them plan and avoid such fees
    - 5.8m shares re-purchased in the $23 plus range
    - 87% institutional ownership now … Roy mentioned this may cause some funds to liquidate based on the industry and the economy and not on WAFD’s individual merits
    - New regulation is burdensome and is slowing down and adding expense to the consumer loan process
    - Industry is for fewer branch visits and more online transactions … but a branch in the neighborhood is still the number one thing people look for when choosing a bank.
    - Roy mentioned “Everything is for sale” but was in the context of another buyer may not get as good of a return on shareholder investment as current management … but not exactly sure what was meant by this statement
    - Roy mentioned Credit Unions as a competitor and a threat as they have a tax “privilege” advantage and less regulation … Roy had zero good things to say about credit unions.
    - 2015 was a record year 2016 may be tougher … off to a rocky start…. Not sure if Roy was talking about WAFD operations or just recent decline in stock price with overall market decline.

    Go to website and 10k to check out my notes for factuality.

  • Reply to

    FYI egg prices

    by netlosstoo Oct 2, 2015 5:10 PM
    netlosstoo netlosstoo Jan 19, 2016 12:58 PM Flag

    Sharply higher undertone .... looks like the industry might have hit its pre-Easter low as producers molt hens after the busy t-day xmas holiday and prep them for easter .... however the pace for replenishing hens lost in the bird flu will begin to accelerate here .... unless we have bird flu round 2 ... most recent cases are low pathogen ... not sure what difference that makes .... again defer to eggtrader on that

    NW_PY018
    Des Moines, IA Tue. Jan 19, 2016 USDA Market News

    SHELL EGGS: Daily Midwest Regional Eggs


    Midwest delivered asking prices 3 cents higher for Extra Large and Large,
    and 15 cents higher for Medium. Producer prices are 11 cents higher for
    Large and Medium and 8 cents higher for Small. The undertone is sharply
    higher.

  • Reply to

    usda just announced a case of bird flu

    by blummie1000 Jan 15, 2016 11:18 AM
    netlosstoo netlosstoo Jan 16, 2016 4:58 PM Flag

    in matters of operations and industry rumor mill issues, including bird flu, the only poster worth paying attention to is eggtrader and maybe eatbrowneggs ... but egg trader is much nicer ... anyways RA must be a bit on edge since it was an Indiana turkey farm ... so time to weigh in eggtrader

  • Reply to

    Time for the fed to lower rates

    by greendog03 Jan 13, 2016 3:57 PM
    netlosstoo netlosstoo Jan 14, 2016 12:22 PM Flag

    Liberals with their fancy educations and their high IQ’s will stop at nothing to further their agendas. They will cherry pick statistics, encourage critical thinking, or even use “rule of law” when in power, which seems totally illegal to me … And forget about them following any silly internet “wink” laws.

    They think just because they are better looking we’re supposed to join their “save the whales” or “Go Vegan” campaigns or whatever else their liberal cause of the day is.

    It’s really quite sad, you almost have to feel sorry for them.

  • Reply to

    it's time the fed lowered rates

    by greendog03 Jan 8, 2016 3:58 PM
    netlosstoo netlosstoo Jan 11, 2016 7:08 PM Flag

    I’m with you greendog … more evidence of why a CEO change is necessary:
    Unemployment Rate:
    Jan 1 1993 … 7.3% after conservative presidency
    Jan 1, 2001 … 4.2% after liberal
    Jan 1, 2009 … 7.8% after conservative
    Current … 5%

    Reagan trickledown economics clearly benefited Clinton.

    And where would our current economy be if not for the huge Bush capital gain and dividend tax cuts and that huge increase in deficit spending?

    Meanwhile liberals want to increase minimum wage, when we all know that these people will probably blow 100% of that increased income on iPhones, groceries, eggs, and other U.S. goods and services. By decreasing the unemployment rate so much over the last seven years, the conservatives are just being set up for failure for when they take over in 2017.

    We need a corporate tax rate cut so our dividends and capital gains can be increased and we can then spend more money over the next thirty or forty years creating a long term trickling down. In fact corporate double taxation should be illegal all together!

  • Reply to

    it's time the fed lowered rates

    by greendog03 Jan 8, 2016 3:58 PM
    netlosstoo netlosstoo Jan 9, 2016 11:08 AM Flag

    92 to 2000 S&P up 200% plus - Liberal
    2001 to 2008 down 30% - Conservative
    2009 to current up 100% plus – Liberal

    It’s that darn lag effect … conservatives do all the prep work and the liberals get the glory … Bush Sr. did it for Clinton … Bush Jr. did it for Obama …. Then the liberals mess it up so bad the market goes down when the conservatives take over … so we should really be selling stock going into 2017 right?

    It’s one of those counterintuitive things

  • Reply to

    FYI egg prices

    by netlosstoo Oct 2, 2015 5:10 PM
    netlosstoo netlosstoo Jan 8, 2016 2:55 PM Flag

    UB SE L are probably in the $1.15 to $1.18 range. USDA indicates asking prices for next week’s deliveries are steady …. No mention of a weak undertone … so we might have hit bottom before the steady increase into Easter … usually prices start to climb mid-January as more overworked hens go into molt … February is usually fairly steady and March usually sees an increase into the Easter season. Easter is a week earlier this year.
    So at $45 the market has taken out most if not all of the bird flu premium … the industry will be adding about 20m hens over the next half year just to get back to pre-flu levels … and then may add more hens from capacity expansion over the last half year.

    Will egg prices be able to hold prior year levels?

    Will demand bounce back?

    If egg prices hold prior year levels CALM should make a nice profit with the lower grains … but just based on current egg prices it will be a difficult goal to attain.

    To grow … CALM used to just buy other companies with no effect on supply … now they have to build to grow which increases supply … CALM has room to replace a lot of third party egg purchases with their own … I would not want to be an egg supplier to CALM right now .. no future in that. If you have a long term outlook … like ten years … you really want to see these third party egg suppliers get punished … they have had it really good for a very long time … just look at average purchase price of outside eggs compared to CALM’s average purchase price … then add all the processing and packaging and marketing CALM does with these eggs … but I digress … Let’s see if egg prices can get back to UB SE L $1.50 by February 1.

  • Reply to

    Q3 guess updated

    by netlosstoo Dec 26, 2015 4:28 PM
    netlosstoo netlosstoo Jan 6, 2016 10:40 AM Flag

    More for Ed ...
    For your spread sheet I would try to keep it simple.
    - Consider all generic sales as Large and from the SE region. About 87% of eggs produced are large and the mix is not going to change much from Q to Q
    - Specialty egg price per dz. will generally be consistent one Q to the next. Bird flu has temporarily changed that.
    - Egg product is only about 4% of sales … don’t spend much time on it.
    - I’ve noticed average outside egg purchases per dozen is close to average overall sales price per dz. This is because a lot of outside purchases are specialty eggs.
    - Processing and raising costs are very consistent based on dz. produced each Q.
    - Feed costs go up and down with grains so you can kind of index the prior Q’s. I use a 70%/30% corn / Soybean meal ratio and 3.4 pounds per dozen, then add about 8 cents per dz for specialty diet, southern basis and other. I usually miss by 1 or 2 cents per dz on my guesses.

    So do all that and if you get within 20 cents you’ve made a good guess. CALM doesn’t give guidance because they have no idea at the beginning of the Q what they will earn. They price so much off the spot market and egg prices can go up or down 50 cents from one week to the next. I am fairly convinced analysts do not have any more info available than we do.

  • Reply to

    Q3 guess updated

    by netlosstoo Dec 26, 2015 4:28 PM
    netlosstoo netlosstoo Jan 6, 2016 10:36 AM Flag

    Ed
    My understanding is that CALM is both an owner and a customer of Eggland Best. They license the right to produce and market eggs with that special diet (I’ve heard seaweed is an ingredient?) and EB label. IMO a large portion of CALM’s specialty egg revenue is from EB eggs produced. Then as part owners they record income under other income based on EB entity profits. We don’t know how many EB or cage free eggs CALM produces …. It’s not info they provide … I don’t think analysts know either … my personal guess is that about 80% of CALM’s specialty eggs are nutritionally enhanced eggs and about 20% are cage free/enriched colony, with a small portion of those cage free eggs also being organic. That ratio will change significantly over the next ten years.

  • Reply to

    Q3 guess updated

    by netlosstoo Dec 26, 2015 4:28 PM
    netlosstoo netlosstoo Jan 2, 2016 12:30 AM Flag

    The UB price quotes generally run about 14 or 15 cents higher than the USDA quote. I buy the UB monthly review letter that shows me the quotes for the month, and it comes out at the end of each month..

    CALM is a part owner in the Eggland Best entity as well as others, but they do not consolidate these entities. They record earnings after the EB calendar year and when EB gives its owners a dividend.... CALM's Q3. This year EB should have had a great year as did CALM ... due in part to the bird flu.

    Egg prices are still quite high ... but expectations where for even higher egg prices.

  • Reply to

    Q3 guess updated

    by netlosstoo Dec 26, 2015 4:28 PM
    netlosstoo netlosstoo Dec 28, 2015 5:45 PM Flag

    Green ... i think i mentioned in an October post that I was lightening up when egg prices were not meeting my expectations.

    My advice to anyone that owns the stock right now is to never read any of my posts or any other post on this board .... CALM might go down over the next year or two but long term there is a very high probability that it will be a winner ... it's just the best egg company in the world .. my posts for the most part are short term (next quarter ... next year) in nature. Also ... it should not be more than 5% of your portfolio ... maybe 10% for some with a higher risk tolerance.

    as to a buy out ... doubt that it would happen .... but POST bought Micheal for $2.5 B and CALM is a much much much better company than Michaels

    and yes CALM should benefit from long term trends like the cage free movement

  • Reply to

    Q3 guess updated

    by netlosstoo Dec 26, 2015 4:28 PM
    netlosstoo netlosstoo Dec 28, 2015 1:34 PM Flag

    Ooops … forgot to drop my outside egg purchase prices on specialty eggs … that would bring my guess up about 16 cents to $1.26 …. Still pessimistic … I have the EB dividend and other at $10 m … dropped feed costs by 3.5 cents per dz compared to Q2 … but my generic egg UB SE L guess is lower by about 11 cents y/y … that’s what is causing the low guess.

    My fear is lower bird flu hen numbers are masking an oversupply problem …. And that near term demand may have been hurt by recent high prices.

    The lower grain prices add to that pessimism …. CALM does better in the face of adversity … when grains rise higher … egg prices rise disproportionately more … bird flu … mad cow scares … HSUS threats …etc. … all end up being good for industry profitability

    But now we have producers with cash and a lower cost structure … this is bad … look back to CALM EPS results for the five years ended FYE 2003 when the industry had $2 corn… The fantastic results of the last ten years have lulled us into thinking CALM is no longer in a cyclical industry … they are … we just keep getting the cycle extended by drought or bird flu or HSUS CA legislation or Atkins diet … etc.

    Anyone remember when a summer quarter breakeven was considered a huge victory? CALM has not lost $$’s in any quarter in a long long time … but is the probability of a negative quarter in the next two years zero?

    Not saying CALM is a bad value here at $50 …. In the very long term I think CALM will have about twice and maybe three times the market share it has now … I would never recommend shorting this stock ... ever ... it is just too good of a company.

  • netlosstoo by netlosstoo Dec 26, 2015 4:28 PM Flag

    $1.10 EPS
    Expecting:
    $1.55 UB SE L avg price
    $2.20 specialty avg.
    39 cent feed on lower grains and much needed basis relief. Warmer weather for transportation.
    Big EB dividend this Quarter / year!?!

    Earlier guess was based on $1.87 UB SE L and a more narrow spread between UB and actual avg generic price earned.

    Q2 was fairly disappointing …. More from egg market / industry perspective than from a CALM performance perspective …. Expecting more of the same for Q3 ... wondering if imports are messing with domestic supply … wondering if CA and other cage free states are consuming less eggs based on price … wondering if bakers used more substitutes due to price … wondering if US as whole reduced consumption even as prices dropped over the last two months

  • Reply to

    Outside egg purchases

    by netlosstoo Sep 29, 2015 10:32 AM
    netlosstoo netlosstoo Dec 26, 2015 3:26 PM Flag

    My biggest industry gripe
    For Q2:
    CALM average sale price of eggs was $1.97
    CALM earns $1.86 on generics
    CALM earns $2.31 on specialty
    Average purchase price for outside eggs are $1.97
    What does this tell us about outside eggs?
    1) Most are likely specialty
    2) Of those specialty eggs, they are probably weighted more heavily towards organic - cage free than towards nutritionally enhanced
    3) CALM is getting squeezed on third party egg purchases

    The spread between avg. UB SE L and CALM’s $1.86 avg. generic price was quite wide at about 26 cents … so we know retailers are hammering CALM’s sales price. Outside generic purchases are normally set by UB pricing which favors the seller.

    CALM is keeping the little guy without the retail relationship very healthy, so now he doesn’t want to sell out … forcing CALM to add production to diminish reliance on third party eggs, which increases the probability of industry over production.

    This artificially high price for third party eggs will be corrected over the next ten years and it will not be pretty … the more un-pretty it gets the better CALM will come out in the end of the un-prettyness.

    JMHO

  • Reply to

    FYI egg prices

    by netlosstoo Oct 2, 2015 5:10 PM
    netlosstoo netlosstoo Dec 21, 2015 5:39 PM Flag

    NW_PY018
    Des Moines, IA Mon. Dec 21, 2015 USDA Market News

    SHELL EGGS: Daily Midwest Regional Eggs


    Midwest delivered asking prices are 16 cents lower for Extra Large and
    Large and 21 cents cents lower for Medium. Producer prices are steady. The
    undertone is steady to weak……

    PRICES TO RETAILERS, SALES TO VOLUME BUYERS, USDA GRADE A AND GRADE A,
    WHITE EGGS IN CARTONS, CENTS PER DOZEN.

    PRICES DELIVERED TO WAREHOUSE:
    RANGE MOSTLY
    EXTRA LARGE 115-124 118-121
    LARGE 114-123 116-119

  • Reply to

    FYI egg prices

    by netlosstoo Oct 2, 2015 5:10 PM
    netlosstoo netlosstoo Dec 21, 2015 4:16 PM Flag

    So UB SE L must be in the $1.40 range this week … On earnings, I am fairly confident CALM will at least meet or likely beat the lowered $2.40 EPS estimate as mentioned in an earlier post … I am not a day trader type … BUT … the stock is moving up in anticipation of the EPS release and may continue to move higher with the release … maybe even some short covering … but at some point the focus will return to current and future egg prices. May usually has the worst monthly egg prices and last year we did not find out what that normalized low is. There is tremendous uncertainty in my mind about next year’s egg prices. Also, there will be more corn planted this year, which could lead to lower priced feed, which would not be a good long term result for CALM and the industry. So far bird numbers have not ramped up much yet, but as mentioned in a previous post those numbers could start to more aggressively increase starting in January. If y/y egg prices are lower with 20m fewer hens where will they be when we get those 20m added back and maybe add another 5 or ten on top of those numbers? The flock could possibly be in the 310 to 315m range by next December 1 depending on how much additional capacity CALM and the industry is adding right now … ISU’s last flock projection was August, I wonder if they quit forecasting due to the high level of uncertainty. So when we were looking for the egg price peak in December, my thinking was off by more than a buck. Also... at what point does CALM loose its “force majeure” spot price pricing and have to go back to their more tempered formula pricing? For both generics and specialty … As I look at the bottom for next May I’m thinking we might be as low as $1 UB SE L, which we have not seen since 2012. Hopefully I’m as wrong on my May “low” thinking as I was on my December “high” thinking…

    From the Ramblings of Debbie Downer

  • Reply to

    Cage Free Movement

    by netlosstoo Oct 2, 2015 2:10 PM
    netlosstoo netlosstoo Dec 14, 2015 12:57 PM Flag

    What will be the trajectory of the hen numbers related to the cage free movement.

    IMO

    More and more cage free hens will be added to meet real (people who want cage free) and artificial (McD and others that want to appear socially contentious) demand.

    Producers are not likely to convert hen houses as there continues to be a high demand for generic eggs. Once caged production is banned or there is a ban date, then we may start to see houses converted. The converted houses will not be as efficient as new cage free houses built.

    Producer will likely not add much more battery cage production as it may likely be banned in the future.

    In-line mega complexes started to become really popular in the 80’s early 90’s and those complexes are still probably in fair shape. In ten years some of those may start to be obsolete.

    So added cage free and maybe enriched colony hens may lead to a larger and larger hen population and maybe even a period of over production.

    If the federal government bans or limits caged production with a 100% conversion date, that date may see the hen numbers fall off a cliff. With CA, the rest of the nation was able to make up for the lost CA production, but there will be less source for making up the lost production on a U.S. level conversion.

    And once we only have cage free production, will these eggs now be commoditized, the same way generics are now?

    Those are my thoughts … interested in how others see this movement playing out.

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