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Pilgrim's Pride: A Strong Buy

Zacks Equity Research

Zacks Investment Research upgraded Pilgrim's Pride Corporation (PPC) to a Zacks Rank #1 (Strong Buy) on March 16, 2013.

Why the Upgrade?

The company’s fourth quarter 2012 proved to be a solid quarter for Pilgrim's Pride considering the financial results disclosed by Pilgrim's Pride on February 14, 2013. The company’s net results improved drastically from a loss of 40 cents per share in the year-ago quarter to earnings of 9 cents per share in the fourth quarter 2012. Compared with the Zacks Consensus Estimate of a loss of 8 cents, the net results improved 212.5%.

Revenue increased 19.7% year over year to $2.2 billion due to a strong product demand as well as an extra working week in the quarter.

Talking of costs, mixed results were seen as cost of sales increased by 16.9% while selling, general and administrative expenses plummeted 6.3%. The company’s focus on improving its operational efficiency enabled it to realize roughly $210 million in 2012 and an additional $125 million is expected in 2013.  

Pilgrim's Pride’s solid financial performances in three out of four trailing quarters, with an average positive earnings surprise of 129.3%, raise our optimism for a better quarter ahead. For the first quarter 2013, we have an Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of +69.2% while for 2013 Earnings ESP is +12.3%.    

Also, the earnings estimate for Pilgrim's Pride has gone up in the last 30 days. For 2013, the Zacks Consensus Estimate increased by 23.3% to $1.06 while that for 2014 the estimate went up 4.3% to $1.22.

Other Stocks to Consider

Pilgrim's Pride Corporation operates in the meat products industry and currently has a market capitalization of $2.3 billion. Other stocks to watch out for in the industry are Hillshire Brands Company (HSH), with a Zacks Rank #1 (Strong Buy) and Hormel Foods Corporation (HRL) and Tyson Foods, Inc. (TSN), each with a Zacks Rank #2 (Buy).

Read the Full Research Report on TSN

Read the Full Research Report on HRL

Read the Full Research Report on HSH

Read the Full Research Report on PPC

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