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Pilgrim's Pride Looks Solid, Prepared Foods Unit a Key Driver

Zacks Equity Research

Pilgrim's Pride Corporation PPC has been benefiting from robust growth strategies and advancements in the Prepared Foods business. The company has been undertaking moves to augment fresh food offerings. Also, it has undertaken prudent acquisitions to widen its brand portfolio.

Shares of this Zacks Rank #1 (Strong Buy) company have surged 43.8% in the past year compared with the industry’s growth of 26.6%. Let’s take a closer look at the factors aiding Pilgrim's Pride growth.



Factors Driving Pilgrim's Pride’s Growth

Pilgrim's Pride’s Prepared Foods business is witnessing solid growth under well-known brands such as Premium Pilgrims and Del Dia. These brands are gaining from favorable consumer acceptance. During third-quarter 2019, volumes in the Prepared Foods category increased double digits in the United States backed by continued investments in R&D and sales as well as marketing of new products. Also, the company is rolling out new technologies to become the first digital chicken company.

Notably, Pilgrim's Pride has been gradually strengthening its competency on the back of business acquisitions. In October 2019, the company acquired a West Midlands food manufacturer — Tulip — to strengthen its position as a leading global player by expanding its prepared foods portfolio and brands. Earlier acquisitions like Moy Park (September 2017) and GNP Company (January 2017) are likely to bolster sales in the upcoming quarters.

Also, Pilgrim's Pride consistently strives to improve through innovations. In this respect, the company has been expanding in the fresh food offerings space. In fact, the launch of fresh chicken products under premium Pilgrim's brand has been receiving favorable consumer response. Further, the company is on track to expand gluten-free products. Also, Pilgrim's Pride has been enhancing breast meat portioning capabilities to mitigate its exposure to volatility of pure commodity market.

Apart from this, the company has been steadily augmenting marketing support of its brands as they expand and enter new regions. Additionally, Pilgrim's Pride resorts to frequent supply-chain improvements to enhance efficiency and reduce costs. To this end, the company has been progressing well with developing automation technology for its processing plants. The company’s dedicated efforts, including zero-base budgeting and positive impacts from acquisitions, are expected to create synergies.

We believe that, these upsides are likely to help the company maintain a strong footing in the food space.

Looking for Other Food Stocks? Check These

Post Holdings, Inc. POST, which sports a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lamb Weston Holdings Inc. LW, which carries a Zacks Rank #2, has a long-term earnings growth rate of 8.8%.

Kellogg Company K, which carries a Zacks Rank #2, has a long-term earnings growth rate of 6%.

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