Pilgrim's Pride Now a Strong Buy - Analyst Blog


Zacks Investment Research upgraded Pilgrim's Pride Corporation ( PPC ) to a Zacks Rank #1 (Strong Buy) on Oct 2, based on impressive second-quarter 2013 results and a strong outlook.

Why the Upgrade?

Pilgrim's Pride reported strong results for the second quarter of 2013, with earnings per share of 74 cents, increasing 174.1% year over year. The increase in earnings was a result of strong revenues as well as the company's excellent operational performance.

Revenues for the quarter were $2.2 billion, recording a year-over-year hike of 10.6%. Results were boosted by a demand hike in the U.S. as well as Mexico. Adjusted earnings before interest, taxes, depreciation and amortization increased 110.8% year over year to $265.0 million in the second quarter.

The Zacks Consensus Estimate for 2013 has increased 33.9% in the last 90 days to $2.21 per share and for 2014 the estimate went up 43.5% to $2.11 per share during the same time frame.

With the third-quarter 2013 results expected soon, management expects the second half of 2013 to be better than the first half. Pilgrim's Pride believes that it on track to reach a level of 30% growth in value-added exports for 2013. For the purpose, the company launched a value-added brand - Savoro - which is expected to enhance its presence in Middle East, Africa and Asia.

It is also expected that the feed ingredient prices will see a drop in the fourth quarter of 2013, thereby, reducing the cost of goods sold by the company.

Moreover, Pilgrim's Pride plans to sell its Batesville, Ark.-based processing complex, which accounts for only 1% of the company's revenues. The divestiture will help the company to align its facilities with its long-term growth strategy.

Additionally, in August, the company pledged an investment of $25.0 million in its operations in Alabama. The investment includes $10.0 million for the overhaul of the company's processing facility in Enterprise, along with the construction of a feed mill facility in Pinckard.

Other Stocks to Consider

Apart from Pilgrim's Pride, other stocks in the industry with a favorable Zacks Rank include Amira Nature Foods Ltd. ( ANFI ), Calavo Growers Inc. ( CVGW ) and Tyson Foods, Inc. ( TSN ). While Amira Nature Foods and Calavo Growers carry a Zacks Rank #1 (Strong Buy), Tyson Foods carries a Zacks Rank #2 (Buy).

AMIRA NATURE FD (ANFI): Free Stock Analysis Report

CALAVO GROWERS (CVGW): Free Stock Analysis Report

PILGRIMS PRIDE (PPC): Free Stock Analysis Report

TYSON FOODS A (TSN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ANFI , CVGW , PPC , TSN



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