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Pilgrims Pride Corp PPC

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Morningstar’s Analysis

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Pandemic Margin Recovery for No-Moat Pilgrim’s Pride Is on Track; Shares Look Compelling

Analyst Note

| Rebecca Scheuneman, CFA |

The most important takeaway from no-moat Pilgrim’s Pride’s first quarter is that the recovery is tracking with our forecast, and we hold to our $33.50 fair value estimate. With the 2% drop on the report, shares offer over 25% upside and we recommend investors build positions. First-quarter sales grew 6.5% (on top of last year’s 1.1% organic growth) and adjusted operating margins increased 220 basis points to 4.9%, given higher selling prices. We remain comfortable with our fiscal 2021 forecast for 6.0% sales growth and 5.3% adjusted operating margins.

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Company Profile

Business Description

Pilgrim's Pride is the second- largest poultry producer in the U.S. (62% of 2020 sales), Europe (27%), and Mexico (11%). The 2019 purchase of Tulip, the U.K.'s largest hog producer, marks the firm's entrance into the pork market, which represented 11% of 2020 sales. Pilgrim's sells its protein to chain restaurants, food processors, and retail chains under brand names Pilgrim's, Country Pride, Gold'n Plump, and Just Bare. Channel exposure is split evenly between retail and food service, with the majority of food-service revenue coming from quick-service restaurants. JBS owns 80% of Pilgrim's outstanding shares.

1770 Promontory Circle
Greeley, CO, 80634-9038
T +1 970 506-8000
Sector Consumer Defensive
Industry Packaged Foods
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 26, 2021
Stock Type Slow Growth
Employees 54,900