Why Is Pilgrim's Pride (PPC) Up 1.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Pilgrim's Pride (PPC). Shares have added about 1.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Pilgrim's Pride due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Pilgrim’s Pride’s Q2 Earnings Top Estimates, Decline Y/Y
Pilgrim’s Pride reported second-quarter 2023 results, with the top and bottom lines deteriorating from the year-ago quarter. Nevertheless, the company’s earnings surpassed the Zacks Consensus Estimate.
Pilgrim’s Pride has been bearing the brunt of persistent inflation and issues related to protein availability. That said, the company’s portfolio diversification strategies, operational excellence, higher attribute programs and branded offerings, and Key Customer partnerships have been driving growth. The company is on track with expansion projects with the Athens, GA-based facility and the protein conversion plant in South Georgia is ready to be fully operational by the beginning of 2024.
Q2 in Detail
The company reported adjusted earnings of 44 cents a share, surpassing the Zacks Consensus Estimate of 28 cents. However, the bottom line deteriorated from $1.54 per share reported in the year-ago quarter.
The producer, marketer and distributor of fresh, frozen and value-added chicken and pork products generated net sales of $4,308.1 million, which declined 7% from the year-ago quarter. Net sales fell in the U.S. operations, with challenges in the commodity segment.
Net sales in the U.S. operations were $2,446.2 million, down from $2,899.9 million in the year-ago quarter. Management highlighted that diversification in bird sizes and operational excellence initiatives led to margin growth in the U.S. Fresh business amid persistent challenges in the commodity Big Bird business. The company saw momentum for branded fully-cooked products like Just Bare and Pilgrim’s, which collectively grew more than 56% year over year, with an upside in the e-commerce channel.
Mexico operations generated net sales of $551.1 million in the reported quarter, up from $486.7 million in the prior-year quarter. Pilgrim's Pride’s Mexico business witnessed improved performance as supply and demand fundamentals became more balanced and challenges from live operations were reduced. The company also expanded its value-added programs and brands.
Net sales from U.K. and Europe operations rose to $1,310.8 million in the quarter under review from $1,245.1 million in the prior year. The company’s U.K. and Europe businesses gained from margin growth on continued manufacturing network optimization program, strength in Key Customers and synergies from back-office integration.
Pilgrim's Pride’s cost of sales increased to $4,029.7 million from $3,954.9 million in the year-ago quarter. Gross profit slumped to $278.4 million from $676.8 million. Adjusted EBITDA of $248.7 million declined from $623.3 million reported in the year-ago quarter. The adjusted EBITDA margin of 5.8% contracted from 13.5% in the year-ago quarter.
Other Financial Details
This company ended the quarter with cash and cash equivalents of almost $731 million, long-term debt (less current maturities) of $3,699.6 million, and total shareholders’ equity of $3,072.6 million. The company provided $89.3 million of cash from operating activities for six months ended Jun 25, 2023.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Pilgrim's Pride Corporation (PPC) : Free Stock Analysis Report
