Will Pilgrim's Pride (PPC) Earnings Disappoint Again In Q2?

Diversified food company Pilgrim's Pride Corporation (NASDAQ:PPC) is scheduled to report second-quarter 2016 results on Jul 28, after the closing bell. Pilgrim’s Pride is engaged in production, distribution and sale of frozen, fresh and value-added chicken products to various foodservice operators, distributors and retailers.

In the trailing four quarters, the company reported average negative earnings surprise of 14.65%. Let’s see how things are shaping up prior to this announcement.

Factors at Play

Pilgrims Pride reported weak results in the last reported quarter. The downside was attributable to negatives like outbreak of Avian Flu, high volatility in consumers’ brand loyalty, lower-than-expected wage increase, high income inequality in the U.S., as well as lackluster economic performance in emerging markets. Factors like these might continue to hurt the company’s results in the to-be-reported quarter.

However, the company remains on track with its impressive growth initiatives to mitigate the aforesaid risks. In sync with the increasing demand for organic and Associated British Foods plc (LON:ABF) certified products, Pilgrim’s Pride recently started offering USDA-certified organic chicken from one of its facilities. This strategic move is expected to support the company’s sales growth. Also, its diversified product portfolio, operational excellence and robust marketing strategies are expected to boost results in the second quarter.

Share price of the company as of Jul 22, 2016 was $25.19 per share. We expect the release of second-quarter results to lead to stock price movement in the near term.

Earnings Whispers

Our proven model does not conclusively show that Pilgrim's Pride is likely to beat earnings in the quarter to-be-reported 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 an earnings beat. That is not the case here as we will see below.

Zacks ESP: Pilgrim's Pride has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate stand at 65 cents.

Zacks Rank: Pilgrim's Pride carries a Zacks Rank #5 (Strong Sell).

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.

Stocks to Consider

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

Callaway Golf Co. (NYSE:ELY) with an Earnings ESP of +12.12% and a Zacks Rank #1.

Boyd Gaming Corporation (NYSE:BYD) with an Earnings ESP of +3.33% and a Zacks Rank #2.

Vail Resorts Inc. (NYSE:MTN) with an Earnings ESP of +1.21% and a Zacks Rank #2.

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