In recent times, several developments around the food market have been observed. These include rising consciousness and awareness about food quality and grading, population growth, reforming regulatory obligations and compliances, and consumers’ shift towards healthier food choices. As per Statista, value added in the food market is expected to be $219 billion in 2025.

Further, the food processing market is anticipated to grow to $400.43 billion by 2030, exhibiting growth at a CAGR of 11.8%, driven by growing middle classes in developing nations, rising worldwide population, and evolving market trends.

Amid this backdrop, Pilgrim’s Pride Corporation (PPC) stands strong within the food makers industry owing to its portfolio of high-quality food products. The company produces, processes, markets, and distributes fresh, frozen, and value-added chicken and pork products to retailers, distributors, and food service operators.

Pilgrim’s operates through its various brands, including Pilgrim’s Chicken, Just Bare, Gold’n Plump, Moy Park, Pilgrim’s UK, Pilgrim’s Fresco, Pilgrim’s Value Added, Del Dia, and Country Pride. Most of its brands rank as the most frequently consumed or the strongest producer in different regions. This is a reflection of PPC’s strong market presence across the world.

The company’s solid standing and efficiency are not only reflected in its operations but also in its stock performance. Shares of PPC have increased 20.1% over the past six months to close its last trading session at $45.94. The stock also delivered an impressive gain of 59% over the past year.

Let’s look at factors that could influence PPC’s performance in the upcoming months.

Robust Financials

For the third quarter that ended September 29, 2024, PPC’s net sales increased 5.2% year-over-year to $4.58 billion. Its gross profit grew 97.7% year-over-year to $683.97 million. The company’s operating income grew 146.3% from the year-ago value to $508.35 million.

Furthermore, the company’s adjusted EBITDA of $660.38 million indicates growth of 103.8% year-over-year. Adjusted net income attributable to Pilgrim’s came in at $387 million and $1.63 per common share, up 183.1% and 181% from the prior year’s quarter, respectively.

As of September 29, 2024, PPC’s cash and cash equivalents stood at $1.88 billion, compared to $697.75 million as of December 31, 2023.

Solid Historical Growth

PPC’s revenue grew at a CAGR of 9.2% over the past three years, while its EBITDA improved at a CAGR of 36.9%. Its EBIT increased at a CAGR of 56.5% over the same period, while the company’s normalized net income and tangible book value grew at CAGRs of 85.2% and 118.8% over the same time frame, respectively.

Favorable Analyst Estimates

Analysts expect PPC’s revenue for the fourth quarter (ended December 2024) to come in at $4.63 billion, indicating an increase of 2.3% year-over-year. The consensus EPS estimate of $1.11 for the same period reflects an 87.3% year-over-year improvement. Moreover, the company has surpassed the consensus EPS estimates in each of the trailing four quarters.

For the fiscal year 2024, the company’s revenue and EPS are anticipated to grow 4.3% and 207.4% year-over-year to $18.11 billion and $5.20, respectively.

High Profitability

PPC’s trailing-12-month net income margin of 5.46% is 29.8% higher than the 4.21% industry average. Further, its trailing-12-month levered FCF margin of 7.07% is considerably higher than the industry average of 5.55%. And the stock’s trailing-12-month ROCE of 27.06% is 152.8% higher than the industry average of 10.70%.

Furthermore, the stock’s ROTC and ROTA of 12.72% and 9.21% are 80.9% and 139.3% higher than the 7.03% and 3.85% industry averages, respectively.

POWR Ratings Reflect Optimism

PPC’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. PPC has a B grade for Growth and Quality, consistent with its robust historical growth and higher-than-industry profitability.

Also, the stock has a B grade for Stability, in sync with its 5-year beta of 0.82.

PPC is ranked #3 among the 75 stocks in the B-rated Food Makers industry.

Beyond what I have stated above, we have also given PPC grades for Value, Sentiment, and Momentum. Get access to all the PPC ratings here.

Bottom Line

PPC is a leading global provider of high-quality food products consisting of well-recognized brands and value-added premium products. The company currently operates through its 39 production facilities and 27 prepared foods facilities situated across U.S. states, the U.K., Puerto Rico, Mexico, and Europe.

The company’s growth in the forthcoming years appears robust, propelled by its continuously expanding capacity, wholesome varieties, and solid industry footing, which solidify its financial standings.

Given PPC’s strong profitability and solid long-term growth prospects, investing in this stock seems prudent.

How Does Pilgrim’s Pride Corporation (PPC) Stack Up Against Its Peers?

While PPC has an overall POWR Rating of A, investors could also check out these other stocks within the B-rated Food Makers industry with A (Strong Buy) or B (Buy) ratings: Sanderson Farms, Inc. (SAFM), Ingredion Incorporated (INGR), and US Foods Holding Corp. (USFD).

For exploring more A and B-rated food maker stocks, click here.

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PPC shares were trading at $46.41 per share on Friday afternoon, up $0.47 (+1.02%). Year-to-date, PPC has gained 2.25%, versus a -1.11% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions. More...

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