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Factors Likely to Impact Pilgrim's Pride's (PPC) Q3 Earnings

Zacks Equity Research
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Pilgrim’s Pride Corporation PPC is scheduled to release third-quarter 2019 results on Oct 30. Let’s discuss the factors that are likely to be reflected in the upcoming quarterly results.

Key Aspects to Note

Pilgrim’s Pride’s third-quarter performance is likely to have benefited from robust strategies to strengthen portfolio. Markedly, acquisitions have a played a key role in bolstering the company’s offerings. It has also been undertaking efforts to strengthen relationships with acquired business, such as GNP Company and Moy Park. Also, expansion in the organic food space, especially fresh chicken and gluten-free products, is expected to have contributed to sales.

We believe that the Prepared Foods business is likely to have been one of the key revenue drivers for Pilgrim’s Pride. This category has been depicting strong growth on the back of well-known brands such as Premium Pilgrims and Del Dia. These brands have been gaining from favorable consumer acceptance. Innovation under the Prepared Foods banner is a major factor behind its success.  

Apart from this, the company’s marketing strategies, supply chain improvements and cost reduction initiatives are commendable. In this respect, the company has implemented automation technology for increasing efficiency across its processing plants. Gains from such prudent moves are also likely to have made an impact on the company’s third-quarter performance.

However, headwinds in Pilgrim’s Pride’s European operations are a concern. The region’s performance has been reeling under rising input costs. Other meat manufacturing companies such as Tyson Foods TSN, Hormel Foods HRL and Sanderson Farms SAFM have also been struggling with rising input cost in different business categories.

Pilgrim’s Pride currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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