Pilgrim's Pride (PPC) Well Poised For Growth Amid Headwinds

On Jun 19, we issued an updated research report on premium meat products company, Pilgrim's Pride Corporation (NASDAQ:PPC) .

Over the last three months, shares of this Zacks Rank #3 (Hold) stock yielded a return of 8.20%, against 1.39% growth recorded by the Zacks categorized Food - Meat Products industry.

Notably, the attractiveness of this stock as a current investment choice is supported by its favorable Value Growth Momentum Style Score ‘A’.

Inside Story

Pilgrim's Pride has been steadily boosting its business on the back of unique product diversification strategy. The company anticipates increased demand for organic and Antibiotic-Free chicken products to drive its top-line performance in the quarters ahead.

Moreover, Pilgrim's Pride affirmed that the integration process of GNP Company (acquired in Jan 2017) is running successfully. The company anticipates to accrue annualized synergies worth $30 million in 2017, on the back of this deal. Notably, the latest combination products launched under GNP Company’s Gold'n Plump brand are likely to secure strong response from the market, moving ahead.

Also, Pilgrim's Pride’s new investments, aimed toward strengthening customer relationships, product portfolio and margin expansion, are projected to generate benefits in the to-be-reported quarters.

However, over the last 30 days, the Zacks Consensus Estimate for the stock remained unchanged for both 2017 and 2018, reflecting neutral sentiments.

We believe that certain headwinds in the market might limit Pilgrim's Pride’s near-term prospects. For instance, the company’s profitability is highly sensitive to market price and availability of certain input products such as soybean meal, corn and sorghum. Sudden inflation in the prices of such inputs might hurt the company’s margins in the quarters ahead. Furthermore, stiff industry rivalry or sudden outbreak of a livestock disease like Avian flu might even weigh over the company’s performance, moving ahead.

Stocks to Consider

Some better-ranked stocks in the industry are listed below:

Aramark (NYSE:ARMK) generated an average positive earnings surprise of 4.45% over the trailing four quarters and currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

B&G Foods, Inc. (NYSE:BGS) , which also has a Zacks Rank #2 at present, pulled off an average positive earnings surprise of 1.95% over the last four quarters.

Church & Dwight Company, Inc. (NYSE:CHD) currently holds a Zacks Rank #2 and has an average positive earnings surprise of 6.33% for the last four quarters.

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