PPC - Embedded Expectations Analysis - 2021 04 27
Pilgrim's Pride Corporation (PPC:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with an 18.5x Uniform P/E. Even at these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about their legacy European operations, international protein demand, and the pandemic's effect on global tradeSpecifically, management may lack confidence in their ability to strengthen their legacy European operations, sustain strong revenue growth, and expand the retail distribution for their Just BARE brands. Moreover, management may have concerns about staffing issues, their portfolio mix following the conversion of a commoditized big bird deboning facility, and the pandemic's impact on global trade. They may also be exaggerating the recovery of quick-service restaurants as well as their ability to leverage their portfolio strategy to mitigate the impact of challenging market dynamics. Finally, management may have concerns about the sustainability of their export potential, the availability of crop and protein supply, and protein demand in China
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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