Pilgrim's Pride (PPC) Q4 Earnings Miss Estimates, Sales Up Y/Y

Zacks Equity Research

Pilgrim's Pride Corporation PPC reported fourth-quarter 2019 results, with the top and the bottom line improving year over year. The upside can be attributed to improved performance in the United States, Mexico and European operations. However, earnings lagged the Zacks Consensus Estimate. Let’s take a closer look.

Q4 in Detail

Quarterly adjusted earnings of 14 cents per share surged 55.6% from the figure reported in the year-ago quarter. We believe that higher sales and margins supported the year-over-year upside. However, the bottom line lagged the Zacks Consensus Estimate of 22 cents. .

In the reported quarter, Pilgrim's Pride generated net sales of $3,063.5 million, up 15.3% year over year. Results were backed by higher sales in the United States, Mexico and European operations.

Revenues from the U.S. operations amounted to $1,904.5 million, up 4.6% year over year. The upside was driven by strong demand in case-ready and small bird operations. Results also benefited year over year from better conditions in the U.S. commodity market. Further, Prepared Foods segment improved in the quarter. Additionally, the company’s progress on its Key Customer Strategy is aiding growth.

Mexican operations generated revenues of $343.6 million in the reported quarter, up 6.9% year over year. Results gained from increased volume, which more than offset lower prices along with weak macro conditions in Mexico.

Revenues from European operations moved up 58.5% year over year to $815.4 million as it continued to witness higher input costs in the region. The uptick was driven by the company’s efforts to mitigate input-cost challenges, investments in automation along with focus on improved yields. Robust operational efficiencies further aided the performance. Further, solid domestic demand and export for pork contributed to the upside.

Pilgrim's Pride’s overall cost of sales in the reported quarter increased 12.5% year over year to $2,862.1 million. Moreover, higher sales are likely to have driven gross profit, which rose 80.1% year over year to $201.4 million. Also, gross margin rose 2.4 percentage points to 6.6%.

Further, adjusted EBITDA was $161.6 million, up 45.6% year over year. Adjusted EBITDA margin of 5.3% reflected rise of 1.1 percentage points.

Pilgrim's Pride Corporation Price, Consensus and EPS Surprise

 

Pilgrim's Pride Corporation Price, Consensus and EPS Surprise

Pilgrim's Pride Corporation price-consensus-eps-surprise-chart | Pilgrim's Pride Corporation Quote


Other Financial Details

Pilgrim's Pride exited the quarter with cash and cash equivalents of approximately $260.6 million, long-term debt (less current maturities) of $2,276 million and total shareholders’ equity of $2,536.1 million. Further, the company generated $666.5 million as cash from operating activities for fifty-two weeks ended 29 December, 2019.

Growth Efforts on Track

The Zacks Rank #2 (Buy) company is committed toward boosting operations through Key Customer strategy as well as augmenting capacities and capabilities. Pilgrim's Pride continues to engage in evolving the portfolio with product diversification, high-value products and margin expansion. Moreover, the company is committed toward continuous innovation of new products.

Price Performance

Pilgrim's Pride’s shares have rallied 25% in the past year compared with the industry’s growth of 18.6%.

 



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Hershey Company HSY, which carries a Zacks Rank #2, has a long-term earnings growth rate of 7%.

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