Pilgrim’s Pride Posts Soft Fourth-Quarter Results, but Long-term Outlook Intact; Shares Cheap
We anticipate trimming our $28.50 per share valuation for no-moat Pilgrim’s Pride by around 5% after it posted fourth-quarter results that trailed our targets. In 2016, the firm saw $7.93 billion in sales and an 11.3% adjusted EBITDA margin, lagging our $8.02 billion and 11.7% expectations, respectively. Poultry deflation, spurred by normalizing beef prices, weighed on performance. However, we still believe consumers’ growing preference for chicken will endure after short-term price headwinds ab...Pilgrims Pride is primarily engaged in the production, processing, marketing and distribution of fresh, frozen chicken products to retailers, distributors and foodservice operators. The company's primary product types are fresh chicken products, prepared chicken products and export chicken products. The company's fresh chicken products consist of refrigerated (nonfrozen) whole or cut-up chicken, either pre-marinated or non-marinated and prepackaged case-ready chicken. The company's case-ready chicken includes various combinations of freshly refrigerated, whole chickens and chicken parts in trays, bags or other consumer packs labeled and priced ready for the retail grocer's fresh meat counter.
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