Pilgrim's Pride (PPC) Q4 Earnings: What's in the Cards?

Pilgrim's Pride CorporationPPC is scheduled to report its fourth-quarter 2016 results after the market closes on Feb 9, 2016.

The company has a dismal earnings surprise history, with a negative average surprise of 18.2%, missing estimates each time over the trailing four quarters.

Let's see how things are shaping up prior to this announcement.

Factors Influencing Q4

Pilgrim's Pride's diverse portfolio of birds, impressive geographical footprint and broad customer base are its key strengths that have driven margin and top-line performances for the past few quarters. Especially, the company's small bird business, with solid demand for chicken, is likely to act as the primary growth catalyst for the soon-to-be-reported quarter.

Also, Pilgrim's Pride has been benefiting from positive trends in the export market. Growing demand for the U.S. chicken in international markets have supplemented the company's revenues since the beginning of the year and are likely to fuel fourth-quarter results as well. In addition, flexibility of Pilgrim's Pride to align its production capability with the most profitable customers has helped it to rake in sizable profits.

For instance, within its Foodservice business, the newly launched ABF products have been one of the major growth catalysts, attracting extensive consumer participation. We believe fourth-quarter 2016 results to benefit from ABF products. This apart, the company expanded its product line significantly over the past few years that have added to its strength. During third-quarter 2016, it commenced the shipment of the new value-added Pilgrim's brand in the Mexican market to grab a greater market share. We believe that the broad product mix will supplement the Pilgrim's Pride's sales for the upcoming quarter.

Despite these positives, we believe that competition from other protein supplement providers remains one of the major concerns for the company that can hurt its performance in the quarter to be reported. In addition, softness in key end markets, including Brazil, will likely add to its woes. This apart, broader macro concerns, such as labor market issues, which have been affecting staffing availability,, may offset some of the company's growth drive.

Additionally, appreciation of the U.S. dollar has been weighing on the company's international revenues and margins in recent times. During third-quarter 2016, the top line took a hit from currency fluctuations and given the appreciation of the U.S. dollar, we expect it to affect the financial performance for the to-be-reported quarter. In addition, weakness in foodservice markets, along with low demand & weak prices in the large bird business may restrict some of the growth for the quarter to be reported.

Earnings Whispers

Our proven model does not conclusively show that Pilgrim's Pride is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as we will see below.

Zacks ESP: Pilgrim's Pride currently has an Earnings ESP of 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at 37 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Pilgrim's Pride Corporation Price and EPS Surprise

Pilgrim's Pride Corporation Price and EPS Surprise | Pilgrim's Pride Corporation Quote

Zacks Rank: Pilgrim's Pride carries a Zacks Rank #2. However, a 0.00% ESP makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Pinnacle Foods Inc. PF has an Earnings ESP of +1.27% and a Zacks Rank #2.

Freshpet, Inc. FRPT has an Earnings ESP of +50.0% and a Zacks Rank #3. You can see the complete list of today's Zacks #1 Rank stocks here .

Coty Inc. COTY has an Earnings ESP of +8.33% and a Zacks Rank #3.

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Pilgrim's Pride Corporation (PPC): Free Stock Analysis Report

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Pinnacle Foods, Inc. (PF): 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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