Pilgrim's Pride Corporation
) surprised by nearly 200% in its third quarter report from late
October, which has understandably boosted the share price and
earnings estimates for this chicken producer. Moreover, this Zacks
#1 Rank (Strong Buy) has a compelling valuation, including a
price-to-sales (P/S) ratio of just 0.24 and a price-to-book (P/B)
multiple of as low as 2.07.
Impressive Third Quarter Results
On October 26, Pilgrim's Pride Corp. reported third quarter
earnings of 17 cents per share, topping the Zacks Consensus
Estimate by 183.3% and reversing the year-ago loss of 72 cents. The
company continues to focus on managing its core business, pricing
strategy, cost control initiatives and enhanced sales mix.
Net sales of $2.07 billion surpassed the Zacks Consensus Estimate
of $1.95 billion and grew 9.5% year over year.
Gross profit was $106.1 million compared with a loss of $62.4
million in the year-ago quarter, driven by top-line growth, pricing
strategy and cost control efficiencies. A reduction in selling,
general and administrative expenses also led to operating income of
$61.7 million compared to an operating loss of $125.1 million last
Rising Earnings Estimates
Over the past 60 days, all 5 estimates for 2012 were revised
upward, lifting the Zacks Consensus Estimate by 10.9% to 51 cents
per share. This indicates year-over-year growth of 123.4%. The
Zacks Consensus Estimate for 2013 increased 58.1% to 68 cents as 4
of 5 estimates moved upward. This reflects a year-over-year
increase of 31.5%.
Along with low P/B and P/S multiples, Pilgrim Pride has a low
forward P/E ratio of 13.85 (a P/E ratio under 15.0, a P/B ratio
below 3.0 and a P/S ratio lower than 1.0 generally indicate value).
The trailing 12-month return on equity (ROE) also looks attractive
at 10.4%, compared with the peer group average of 10.3%.
Shares of Pilgrim Pride have been rising since the end of October
2012, after reporting solid third quarter results. Moreover, the
stock is currently trading above its 50- and 200-day moving
averages, which stand at $6.46 and $6.30, respectively. In fact,
the stock has been consistently trading above its 50-day and
200-day moving averages since mid-November 2012. Volume averages
roughly 633K daily.
Pilgrim Pride is the second-largest chicken producer in the world,
with operations in the United States, Mexico and Puerto Rico. The
company exports chicken products to customers in approximately 105
countries, including Mexico. Pilgrim has a market cap of $1.88
billion. Among its peers, Smithfield Foods, Inc (
) carries a Zacks #1 Rank (Strong Buy) while Tyson Foods, Inc (
) carries a Zacks #2 Rank (Buy).
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