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Pilgrim's Pride (PPC) Up More than 45% in Six Months: Here's Why

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·4 min read
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Pilgrim's Pride Corporation PPC looks well positioned, courtesy of sturdy European operations. Also, the company’s strategic growth initiatives including customer-centric approach bode well. The company’s top and bottom lines increased year over year during fourth-quarter 2020 on the back of product portfolio strategy, operational endeavors and the Key Customer strategy. Undeniably, healthy performance across European and Mexican operations contributed to the results.

Notably, shares of this Zacks Rank #2 (Buy) company have surged 46.9% in the past six months compared with the industry’s rally of 8.5%. Moreover, the stock has comfortably outperformed the Zacks Consumer Staples sector, which witnessed growth of 12.1% during the same period.

Factors Narrating Pilgrim's Pride’s Growth Story

Pilgrim's Pride’s European business has been performing well for quite a while now. During the fourth quarter, net sales from European operations rose 4.1%. Effective operational strategies, strong pork exports and robust domestic demand have been contributing to the company’s performance in the region. In fact, management expects that improved operational efficiencies, investments made in automation, focus on higher yields and better management of input costs will continue to favor results in the region. Prior to this, European operations surged 63.4% during the third quarter due to better operational efficiencies and robust retail demand among others.

Moving on, Pilgrim's Pride’s customer-centric approach propelled it to come up with unique offerings that provide competitive advantages. In fact, the company’s focus on key customers helps it refine portfolio and create competitive advantages over its peers, especially amid the coronavirus-led disruptions. In fourth-quarter 2020 earnings call, management stated that it has announced a number of projects in 2020 to further support growth of its key customers. In this regard, the company is doubling the case-ready capacity in its Cold Spring, Minnesota plant. Also, Pilgrim's Pride is increasing the mix of more stable margin case-ready items. Moreover, the company is expanding the manufacturing of differentiated higher attribute to Just BARE brand items by 20%. It is also converting a commoditized large bird deboning plant to effectively support demand.

Apart from this, the company has been steadily augmenting marketing support of its brands, as they expand and enter new regions. Additionally, it resorts to frequent supply chain improvements to enhance efficiency and reduce costs. In this respect, it is on track with developing automation technology for its processing plants. Introduction of such advanced technology is expected to increase efficiency and aid in combating labor availability issues. Moreover, the company’s dedicated efforts, including zero-base budgeting and positive impacts from acquisitions, are expected to create synergies.

All said, we believe that the aforementioned upsides are likely to help Pilgrim's Pride keep its growth story alive and stay in investors’ good books.

More Solid Food Bets

Sanderson Farms, Inc. SAFM, currently sporting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 43.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The J. M. Smucker Company SJM, currently carrying a Zacks Rank #2, has a long-term earnings growth rate of 1.7%.

United Natural Foods, Inc. UNFI, currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 13.6%, on average.

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The J. M. Smucker Company (SJM) : Free Stock Analysis Report

United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report

Sanderson Farms, Inc. (SAFM) : Free Stock Analysis Report

Pilgrims Pride Corporation (PPC) : Free Stock Analysis Report

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