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Pilgrim's Braves Short-Term Headwinds with Cost Savings

We issued an updated research report on the premium consumer goods company Pilgrim's Pride CorporationPPC on Sep 30, 2015. The company is engaged in processing, production, marketing and distribution of frozen, fresh as well as value-added chicken products. Since its inception in 1946, Pilgrim's Pride has significantly improved the scale of its operations with strategic moves. However, the company currently faces certain risks arising from external headwinds.

Growth Opportunities

Pilgrim's Pride makes concerted efforts to expand its margins through reduction of operational costs. This apart, the company undertakes other initiatives such as enhancement of labor efficiency, optimal water usage, methodical management of waste water and proper plant maintenance to maximize its productivity.

Going forward, Pilgrim's Pride also expects to witness operational improvement worth $200 million through cost-savings and effective generation of cash flow. Moreover, the company, along with its focus on solidifying financial fundamentals, ensures an increase in the value of its stakeholders, over time.

Problems to Consider

Avian flu outbreak continues to pose serious problems for meat producers like Pilgrim's Pride in the form of supply-chain issues. Moreover, meat industry anticipates that increasing occurrence of such incidents might compel consumers in the U.S. as well as other countries to reduce chicken consumption.

Also, Pilgrim's Pride remains highly sensitive to pricing as well as availability of certain products such as soybean meal, corn and sorghum. These items are used by the company as intermediate inputs in some of its offerings or for its living operational process. At the same time, risks stemming from stiff industry rivalry and unfavorable currency fluctuations pose major concerns for the company.

Stocks to Consider

Pilgrim's Pride currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Hormel Foods Corporation HRL , Aramark ARMK and Cable ONE, Inc. CABO . All three stocks hold a Zacks Rank #2 (Buy).

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HORMEL FOODS CP (HRL): Free Stock Analysis Report

PILGRIMS PRIDE (PPC): Free Stock Analysis Report

CABLE ONE INC (CABO): Free Stock Analysis Report

ARAMARK HOLDING (ARMK): Free Stock Analysis Report

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


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

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