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Will Chicken Woes Linger in Pilgrim's Pride (PPC) Q1 Earnings?

Zacks Equity Research

Pilgrim's Pride Corporation PPC is scheduled to release first-quarter 2019 results on May 2, before market open. The company’s earnings have lagged the Zacks Consensus Estimate in the trailing four quarters, the average negative surprise being 28.9%. Let’s discuss the factors that are likely to make an impact on the upcoming quarterly results.

A Few Factors at Play

The Prepared Food unit is a key upside to the company’s performance. The category gains from the presence of strong brands like Premium Pilgrims and Del Dia. The unit is expected to sustain its performance in the quarter to be reported.

We note that Pilgrim's Pride is undertaking some major initiatives to augment brand strength. The company’s focus on key customers is a pathway for refining portfolio. Apart from these, it has been steadily augmenting marketing support of brands through expansion into new regions. The company also resorts to frequent supply chain improvements to enhance efficiency and reduce costs. Such prudent efforts along with its zero base budgeting and positive impacts from acquisitions are likely drive the upcoming quarterly results.

On the flip side, Pilgrim's Pride is prone to certain headwinds that might make matters sour. The Company is struggling against a tough commodity chicken market condition in the United States. In fact, the United States Department of Agriculture predicts total chicken industry production growth in 2019 to be lower than the last year, which is likely to weigh on the forthcoming quarterly results. Moreover, expanding cost of sales is likely to impair results.

Pilgrim's Pride Corporation Price, Consensus and EPS Surprise

 

Pilgrim's Pride Corporation Price, Consensus and EPS Surprise | Pilgrim's Pride Corporation Quote

 

How are Estimates Faring?

The Zacks Consensus Estimate for first-quarter earnings is currently pegged at 37 cents per share, which suggests a decline of almost 30.2% from the prior-year quarter’s reported figure. The current estimate has been stable in the past 30 days.

Further, the consensus mark for revenues is pegged at $2.75 billion, calling for rise of 0.5% from the year-ago quarter’s figure.

What Does the Zacks Model Predict?

Our proven model doesn’t show that Pilgrim's Pride can beat bottom-line estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Although Pilgrim's Pride carries a Zacks Rank #3, its Earnings ESP of 0.00% makes us less confident about an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Estimates

Here are a few companies you may want to consider as our model shows that they have the right combination of elements to beat earnings.

Church & Dwight CHD has an Earnings ESP of +1.06% and a Zacks Rank #2.

Inter Parfums IPAR has an Earnings ESP of +0.30% and a Zacks Rank #2.

Campbell Soup CPB has an Earnings ESP of +1.80% and a Zacks Rank #3.

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