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Pilgrim's Pride (PPC) Q1 Earnings Beat, Sales Improve Y/Y

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Pilgrim's Pride Corporation PPC reported first-quarter 2022 results, with the top and bottom lines increasing year over year. Earnings in the quarter surpassed the Zacks Consensus Estimate. Results gained from strength in its portfolio across geographies, brands and products. The company also continues to benefit from long-term investments like automation and focus on service for key customers.

However, the company has been battling input cost inflation, pandemic-induced volatility, supply-chain disruptions and labor shortages.

Shares of the Zacks Rank #1 (Strong Buy) company rallied 5.7% in the after-market trading session on Apr 27, 2022, following the earnings release. The Pilgrim's Pride stock has risen 10.4% in the past year compared with the industry’s growth of 2.7%.

Zacks Investment Research
Zacks Investment Research


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Q1 in Detail

The company reported adjusted earnings of $1.18 a share, up significantly from 42 cents reported in the year-ago quarter. Quarterly earnings also surpassed the Zacks Consensus Estimate of 65 cents.

The producer, marketer and distributor of fresh, frozen and value-added chicken and pork products, generated net sales of $4,240.4 million, which increased 29.5% from the year-ago quarter’s level. Net sales increased in Mexico and Europe, and the U.S. operations.

Net sales in the U.S. operations were $2,581.2 million, up from $1,999.6 million reported in the year-ago quarter. The company’s U.S. operations led growth, driven by the recovery in the foodservice business to the pre-pandemic levels as well as continued strength in retail demand. The foodservice business reported sales volumes close to the pre-pandemic level. Margins in the U.S. business were aided by strength in the commodity large bird deboning business. This was partly offset by continued headwinds related to higher input costs, elevated operating costs and a less optimal price mix.

Pilgrim's Pride Corporation Price, Consensus and EPS Surprise

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

Pilgrim's Pride Corporation price-consensus-eps-surprise-chart | Pilgrim's Pride Corporation Quote

Mexico operations generated net sales of $467.2 million in the reported quarter, up from $419.1 million in the prior-year quarter. The Mexico business benefited from the higher-than-expected demand, reflecting a rebound from the prior quarter. This was partly offset by unusual grow-out conditions and higher grain costs. The company expects to continue growing in Mexico through the improvement of its branded product lines.

Net sales from the U.K. and Europe operations rose to $1,192 million in the quarter under review from $854.7 million in the prior year. The margins for the segment were impacted by ongoing labor shortages, increasing input costs and extraordinary inflation. The company’s live pork operations were affected by excess supply-chain issues in Europe.

Pilgrim's Pride’s cost of sales increased to $3,698.4 million from $3,012.2 million reported in the year-ago quarter. Gross profit climbed to $542 million from $261.2 million. Adjusted EBITDA of $501.8 million increased 97.7% from $253.8 million reported in the year-ago quarter. Adjusted EBITDA margin increased 409 basis points (bps) year over year to 11.83%.

Other Financial Details

Pilgrim's Pride ended the quarter with cash and cash equivalents of $725.5 million, long-term debt (less current maturities) of $3,777.9 million and total shareholders’ equity of $2,781.6 million. The company generated $227 million of cash from operating activities for the year ended Mar 27, 2022.

Looking for Solid Food Stocks? Check These

Some more better-ranked stocks are Archer Daniels Midland ADM, McCormick & Company MKC and Sysco SYY.

Archer Daniels, one of the leading producers of food and beverage ingredients and goods made from various agricultural products, currently sports a Zacks Rank #1. Shares of Archer Daniels have gained 47.7% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Archer Daniels’ current financial year’s sales and EPS suggests growth of 1.4% and 3.9%, respectively, from the year-ago reported figure. ADM has a trailing four-quarter earnings surprise of 22.3%, on average.

McCormick, the leading manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors to the food industry across the entire globe, currently carries a Zacks Rank #2 (Buy). Shares of McCormick have gained 12.5% in the past year.

The Zacks Consensus Estimate for McCormick’s current financial year’s sales and earnings suggests growth of 5% and 3.9%, respectively, from the year-ago reported numbers. MKC has a trailing four-quarter earnings surprise of 7.3%, on average.

Sysco, which markets and distributes a range of food and related products, carries a Zacks Rank #2 at present. Shares of SYY have moved up 4.2% in the past year.

The Zacks Consensus Estimate for Sysco's fiscal 2022 sales and earnings suggests growth of 30.4% and 120.1%, respectively, from the year-ago reported number. SYY has a trailing four-quarter earnings surprise of 3.7%, on average.


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