Company Reports

We will discontinue analyst coverage of Pilgrim's Pride on or about April 20.

Pilgrim's Pride's fourth-quarter sales rose 3.3% over the prior year, as growth in Europe and Mexico more than offset a decline in the US that stemmed from lower commodity cut-out values. Falling prices for some cuts also hit profits, as adjusted EBITDA margin contracted 280 basis points to 9.2%.

Even as the second-largest poultry producer in the US (59% of 2024 sales), the UK and Europe (29%), and Mexico (12%), Pilgrim’s Pride remains vulernable to commodity cycles. It primarily sells fresh chicken (with pork also sold in Europe), with just 26% of sales coming from prepared products, which includes private-label offerings. Because meat is a commodity and carries little to no brand, it is exposed to volatility in input costs and selling prices. We don’t think diversification afforded through acquisitions into pork and Europe reduces that risk, given the limited synergies we see across proteins and regions.

After enjoying an extended period of pristine chicken markets, Pilgrim's Pride saw a tougher third quarter. Although sales rose 3.8% over the prior year, its adjusted EBITDA margin contracted 110 basis points to 13.3%. Lower margins in the US and Mexico offset its UK and Europe segment.

Even as the second-largest poultry producer in the US (59% of 2024 sales), the UK and Europe (29%), and Mexico (12%), Pilgrim’s Pride remains beholden to commodity cyclicality, in our view. It primarily sells fresh chicken (with pork also sold only in Europe), with just 26% of sales coming from prepared products, though this includes private-label offerings. Because meat is a commodity and carries little to no brand or pricing power, it is exposed to volatility in input costs and selling prices. We don’t think the diversification afforded through acquisitions into pork and Europe necessarily reduces that risk, given the limited synergies we see across proteins and regions.

Chicken markets continue to enjoy strong end-market demand, stable operating conditions, and input costs, and benefit from high beef prices due to low cattle supply. As a result, Pilgrim's Pride's sales rose 4.3% over the prior-year quarter, although its adjusted EBITDA margin was flat at 14.4%.

Even as the second-largest poultry producer in the US (59% of 2024 sales), the UK and Europe (29%), and Mexico (12%), Pilgrim’s Pride remains beholden to commodity cylicality, in our view. It primarily sells fresh chicken (with pork also sold only in Europe), with just 26% of sales coming from prepared products, though this includes private-label offerings. Because meat is a commodity and carries little to no brand or pricing power, it is exposed to volatility in input costs and selling prices. We don’t think the diversification afforded through acquisitions into pork and Europe necessarily reduces that risk, given the limited synergies we see across proteins and regions.

Chicken markets remained healthy and drove Pilgrim's Pride sales up 2.3% over the prior-year quarter and adjusted EBITDA margin wider by 3.4 percentage points to 12%, extending the streak of double-digit margins to four quarters.

Even as the second-largest poultry producer in the US (59% of 2024 sales), the UK and Europe (29%), and Mexico (12%), Pilgrim’s Pride remains beholden to commodity cylicality, in our view. It primarily sells fresh chicken (with pork also sold only in Europe), with just 26% of sales coming from prepared products, though this includes private-label offerings. Because meat is a commodity and carries little to no brand or pricing power, it is exposed to volatility in input costs and selling prices. We don’t think the diversification afforded through acquisitions into pork and Europe necessarily reduces that risk, given the limited synergies we see across proteins and regions.

Market conditions for chicken remained favorable for Pilgrim's Pride in its fourth quarter. Although sales declined 3.5% over the prior-year quarter, adjusted EBITDA margin expanded 5.2 percentage points to 12%—the third consecutive quarter of double-digit margins.

Even as the second-largest poultry producer in the US (58% of 2023 sales), the UK and Europe (30%), and Mexico (12%), Pilgrim’s Pride has failed to create a competitive advantage, in our view. It primarily sells fresh chicken and pork (only in Europe), with just 27% of sales coming from prepared products, though this includes private-label offerings. Because meat is a commodity and carries little to no brand or pricing power, it is exposed to volatility in input costs and selling prices. We don’t think the diversification afforded through acquisitions into pork and Europe necessarily reduces that risk, given the limited synergies we see across proteins and regions.

Market conditions for chicken are as good as they get for Pilgrim's Pride, with ample supply and strong demand. As weary consumers continue to be weighed down by inflation, chicken remains the most attractive protein on a relative basis.

Even as the second-largest poultry producer in the US (58% of 2023 sales), the UK and Europe (30%), and Mexico (12%), Pilgrim’s Pride has failed to create a competitive advantage, in our view. It primarily sells fresh chicken and pork (only in Europe), with just 27% of sales coming from prepared products, though this includes private-label offerings. Because meat is a commodity and carries little to no brand or pricing power, it is exposed to volatility in input costs and selling prices. We don’t think the diversification afforded through acquisitions into pork and Europe necessarily reduces that risk, given the limited synergies we see across proteins and regions.

No-moat Pilgrim’s Pride reported robust second-quarter results as market conditions for chicken remain very favorable. Net sales were up nearly 6% to $4.6 billion, but adjusted EBITDA exploded by more than 160% to $656 million. Not only is margin nearing historical peaks (more than 14% for the quarter), but the stock has also reached an all-time high. We expect to increase our fair value estimate of $32 by a high-single-digit percentage for more favorable chicken markets for longer than we previously thought. But prime conditions—falling feed costs, rising demand boosted by consumers switching from expensive beef, and lower inventories—do not represent structural changes as proteins still belong to commodity markets that face cyclicality. Thus, we see downside risk from current prices.

Even as the second-largest poultry producer in the US (58% of 2023 sales), the UK and Europe (30%), and Mexico (12%), we think Pilgrim’s Pride has failed to create a competitive advantage. Pilgrim’s Pride primarily sells fresh chicken and pork (only in Europe), with just 27% of Pilgrim’s Pride's sales coming from prepared products, though this includes private-label offerings. Because meat is a commodity and carries little to no brand or pricing power, it is exposed to volatility in both input costs and selling prices. We don’t think the diversification afforded through acquisitions into pork and Europe necessarily reduces that risk, given the limited synergies we see across proteins and regions.

No-moat Pilgrim’s Pride delivered strong first-quarter results amid favorable chicken market conditions. Net sales were nearly $4.4 billion, almost 5% higher than a year ago. Profitability was even better, with adjusted EBITDA of $372 million, nearly 1.5 times that of the year-ago quarter. This resulted in a 490-basis-point adjusted EBITDA margin expansion to 8.5%, buoyed by lower feed costs.

Even as the second-largest poultry producer in the US (58% of 2023 sales), the UK and Europe (30%), and Mexico (12%), we think Pilgrim’s Pride has failed to create a competitive advantage. Pilgrim’s Pride primarily sells fresh chicken and pork (only in Europe), with just 27% of Pilgrim’s Pride's sales coming from prepared products, though this includes private-label offerings. Because meat is a commodity and carries little to no brand or pricing power, it is exposed to volatility in both input costs and selling prices. We don’t think the diversification afforded through acquisitions into pork and Europe necessarily reduces that risk, given the limited revenue or cost synergies we see across proteins and regions.

No-moat Pilgrim’s Pride reported impressive fourth-quarter results that reflected a dramatic turnaround from the year-ago quarter amid recovering chicken prices and easing input cost inflation. Net sales of $4.5 billion were nearly 10% higher and beat our forecast of $4.4 billion. The improvement in profitability was even better, with adjusted EBITDA of $310 million, nearly five times higher than the fourth quarter of 2022 and well ahead of our forecast of $251 million. Due to near-term profits, we anticipate raising our $28.50 fair value estimate by a low to mid-single-digit percentage.

We’re reinitiating coverage of meat producer Pilgrim’s Pride with a fair value estimate of $28.50 per share and a no-moat rating. Our fair value estimate implies 13 times price/adjusted earnings and 7 times enterprise value/adjusted EBITDA off our fiscal 2024 estimates. At the current market price, we think shares are fairly valued. Investors looking to get into meat processing should take up Tyson shares, which offer significant risk-adjusted upside.

Even as the second-largest poultry producer in the U.S. (62% of 2022 sales), the U.K. and Europe (28%), and Mexico (11%), we think Pilgrim’s Pride has failed to create a competitive advantage. Pilgrim’s Pride primarily sells fresh chicken and pork (only in Europe), with just 25% of Pilgrim’s Pride's sales coming from prepared products, though this includes private-label offerings. Because meat is a commodity and carries little to no brand or pricing power, it is exposed to volatility in both input costs and selling prices. We don’t think the diversification afforded through acquisitions into pork and Europe necessarily reduces that risk, given the limited revenue or cost synergies we see across proteins and regions.