Bear of the Day: Pilgrims Pride (PPC)

Pilgrim’s Pride (PPC), rated as a Zacks Rank #5 (Strong Sell), is a leading player in the production, processing, marketing, and distribution of fresh, frozen, and value-added chicken and pork offerings to a wide range of clients, including retailers, distributors, and food service operators.

The stock has been strong over the last two years, but has given up all its 2025 gains since the summer.   

Investors might be tempted to nibble at this one, but both the fundamentals and technicals are signaling patience.

More about Pilgrim’s Pride

Established in 1946, Pilgrim's Pride, headquartered in Greeley, Colorado, boasts a workforce exceeding 60,000 individuals and has a market cap of $9 billion.

The company offers a diverse array of products under various brands such as Pilgrim's, Just BARE, Gold'n Pump, Country Pride and more.

The company has been particularly focused on growing its Prepared Foods category, which continues to gain traction thanks to ongoing investments in R&D, marketing, and product innovation. Pilgrim’s Pride has been enhancing its mix with organic and “No-Antibiotics-Ever” products to meet rising demand for clean-label, high-quality protein options.

The stock has Zacks Style Scores of “A” in Value and Growth, but “D” in Momentum. It has a Forward PE of 7 and pays no dividend.

Q2 Earnings

Pilgrim’s Pride delivered a 10% EPS beat, with revenue up 4% year-over-year to $4.76 billion. Adjusted EBITDA climbed to $687 million, up from $533 million in the prior quarter, driving a 14.4% margin versus 12% in Q1.

CEO Fabio Sandri credited the company’s diversified portfolio and focus on its Prepared Foods business for the strong results, noting that “demand from Key Customers outpaced the category, and our business became more diversified as sales of prepared offerings expanded.”

The U.S. segment led the way with gains across Fresh, Case Ready, and Prepared, supported by elevated commodity values, continued operational efficiencies, and robust demand from quick-service restaurants. Prepared Foods remained a standout, with net sales up 20% year-over-year, fueled by double-digit retail and foodservice growth and a 26% rise in digitally enabled sales.

Internationally, both Europe and Mexico posted solid performances. The European business delivered margin expansion on improved manufacturing efficiency, cost discipline, and stronger branded momentum for Fridge Raiders and Rollover, while sales to key customers rose over 5% from last year.

The company announced a $400 million investment to build a new fully cooked Prepared Foods facility in Walker County, Georgia, along with expansions at its Moorfield and Waco plants. Management also declared a special dividend of approximately $500 million.

Despite all the positive news, the stock is down over 20% from the earnings announcement.

Analyst Estimates Dropping

Analysts have recently lowered estimates for Pilgrim’s Pride as chicken pricing has moderated and commodity conditions have become less favorable than in the first half of the year. Following a strong Q2 supported by high cutout values and robust Prepared Foods growth, prices for wings, tenders, and breasts have eased as supply rebounded and retail promotions slowed heading into fall, pressuring Q3 margin expectations

Looking at the numbers, we are starting to see a trend lower over the short term and a drastic drop next year.

For the current quarter, we have seen analysts estimates fall in the last 7 days. Numbers have been taken from $1.46 to $1.41, an up lower of 3%.

The current year has also seen a recent drop, with estimates going from $5.39 to $5.21, or 3%.

Looking at next year, numbers drop 18%, falling from $5.08 to $4.15.

After earnings, a handful of analysts dropped their price targets. And with the next earnings report a few weeks away, Goldman Sachs recently cut its price target from $54 to $446.

The Technical Take

The stock was strong in 2024 and held up for most of this year. However, the bulls started losing their taste for the PPC over the summer.

All the moving averages are broken, with the 200-day at $45. We could get a bounce, but the moving averages likely become areas of resistance, instead of support as they were last year.

Looking at the long-term chart from 2023, the $29-34 level will likely be the “Buy Zone”. This is the Fibonacci support area, with the 61.8% support level at $29. Investors should be patient and wait for that potential “buy the dip” area.

In Summary

Pilgrim’s Pride now faces mounting headwinds despite its leading position in the protein market. Falling chicken prices, weaker-than-expected commodity trends, and a deteriorating technical setup have pressured both near-term earnings and sentiment.

With the stock breaking key moving averages and analyst estimates falling sharply, caution is warranted. Investors should remain on the sidelines and watch for a more compelling entry point rather than chasing the decline.

For now, investors looking at the industry should look at Tyson Foods (TSN). The stock is a Zacks Rank #3 (HOLD).  

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This article originally published on Zacks Investment Research (zacks.com).

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