PPC  Pilgrim's Pride Corporation

Exchange

NYSE

Sector

Consumer Non-Durables

Industry

Meat/Poultry/Fish

Market Cap.

5.07B

Vuru Grade

32.50/100

Current Price

$20.43
-0.22 (-1.07%)

Growth Price

$16.10
Overvalued by 21.19%

Stability Price

$3.03
Overvalued by 85.18%

Company Metrics

  • P/E 11.81
  • P/S 0.65
  • P/B 5.8
  • EPS 1.73
  • Cash ROIC 33.93%
  • Cash Ratio 0.14
  • Dividend 0 / 0%
  • Avg. Vol. 1.41M
  • Shares 248.16M
  • Market Cap. 5.07B

Company Description

Pilgrim's Pride Corporation produces, processes, markets, and distributes fresh and frozen chicken products to retailers, distributors, and foodservice operators primarily in the United States. Its fresh chicken products consist of refrigerated (non-frozen) whole or cut-up chicken; and pre-marinated or non-marinated, as well as prepackaged case-ready chicken, which includes various combinations of... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Pilgrim's Pride Corp. Recalls Poultry Products Due To Possible Foreign Matter ...
USDA.gov (press release) - Apr 26, 2016
WASHINGTON, April 26, 2016 - Pilgrim's Pride Corp., a Waco, Texas establishment, is recalling approximately 4,568,080 pounds of fully cooked chicken products that may be contaminated with extraneous materials, including plastic, wood, rubber, and metal ...
Pilgrim's Pride: Recent Declines Present Opportunity
Seeking Alpha - Feb 7, 2017
Pilgrim's Pride (NYSE:PPC) is the second largest poultry producer in the world. The Greely, Colorado corporation boasts that it supplies 1 out of every 5 chickens in the US. The company has a market capitalization of nearly $4.6 billion. I have decided ...
Pilgrim's Pride (PPC) Q4 Earnings: What's in the Cards? - Yahoo Finance
Pilgrim's Pride Corporation Q4 Earnings Report: - SmallCap Network
Today's Brokerage Rating: TransUnion (TRU), Pilgrim's Pride Corporation (PPC)
StockNewsJournal - Feb 24, 2017
Pilgrim's Pride Corporation (NASDAQ:PPC), at its latest closing price of $20.65, it has a price-to-book ratio of 5.75, compared to an industry average at 3.49.
Trading Options During Earnings in Pilgrim's Pride Corporation (NASDAQ:PPC) - CML News
The Pilgrim's Pride Corp. (PPC) Lowered to “Sell” by The Zacks Investment Research - DailyQuint
Pilgrim's Pride, After The Fall
Seeking Alpha - Nov 22, 2016
Subscribers have been asking about chicken products producer Pilgrim's Pride (NYSE:PPC) lately. Its shares dropped from last winter's peak near $28 to the low $18 range.
Pilgrim's Pride, Sunoco Slide into Monday's 52-Week Low Club - 24/7 Wall St.
Pilgrim's Pride: Shorts' Feathers Remain Ruffled
Seeking Alpha - Oct 30, 2016
Pilgrim's Pride (NYSE:PPC) has gotten very little love from the market heading into the back half of 2016. It's a shame, because this is a quality company that simply can't seem to catch a break.
Pilgrim's Pride Corporation Announces 15% Gain In Q4 Bottom Line
RTT News - Feb 8, 2017
Pilgrim's Pride Corporation (PPC) revealed a profit for its fourth quarter that increased from last year. The company said its bottom line rose to $75.35 million, or $0.30 per share.
Stock Returns: Pilgrim's Pride Corporation (NASDAQ:PPC) versus Tootsie Roll ... - CML News
Pilgrim's Pride (PPC) Misses on Q4 Earnings and Revenues - Zacks.com
Pilgrim's Pride to acquire GNP Company for $350 million
Food Business News (registration) - Nov 29, 2016
Pilgrim's Pride Corp., a subsidiary of JBS S.A., has announced a definitive agreement to acquire GNP Co. for $350 million in an all-cash transaction.
Pilgrim's Pride Strengthens Branded Portfolio with Agreement to Purchase GNP ... - GlobeNewswire (press release)
Chicken deal: Pilgrim's Pride buys St. Cloud-based Gold'n Plump for $350 million - Minneapolis Star Tribune
Pilgrim's Pride Corporation to Host Third Quarter 2016 Earnings Call on ...
GlobeNewswire (press release) - Oct 6, 2016
GREELEY, Colo., Oct. 06, 2016 (GLOBE NEWSWIRE) -- Pilgrim's Pride Corporation (NASDAQ:PPC) announced today that it will host its third quarter 2016 earnings conference call and webcast on Thursday, October 27, 2016 at 7:00 a.m.
Pilgrim's Pride Has A Small Margin Of Safety
Seeking Alpha - Jan 21, 2017
Pilgrim's Pride (NYSE:PPC) can be a tentative investment for investors seeking to diversify their portfolio into a solid poultry business.
Biggest Movers in Consumer Goods: Pilgrim's Pride Corporation (NASDAQ:PPC ... - TWN
Pilgrim's Pride Corporation (NASDAQ:PPC) stock price target raised to $21.00 ... - Breaking Finance News
Pilgrim's Pride (PPC) Closes GNP Acquisition Worth $350M
Yahoo Finance - Jan 9, 2017
Pilgrim's Pride Corporation PPC declared that it has concluded the acquisition of the renowned branded chicken products provider in the Upper Midwest - GNP Company - with an all-cash amount of $350 million.
Pilgrim's Pride Announces Closure of GNP Company Acquisition - GlobeNewswire (press release)
What Happened to Pilgrim's Pride? - Market Realist
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for PPC to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate PPC's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$20.43 Current Price

$16.10 Growth Price (DCF)

Overvalued by 21.19%


Growth Rate Assumed by Market: 7.48%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$3.03 Stability Price (EPV)

Overvalued by 85.18%


Discount Rate: 15.0%

$9.67 Book Price

Overvalued by 52.69%


Varying Cash Return on Invested Capital over the past 5 years

PPC has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. However, there is a substantial variation in their Cash ROIC from year-to-year. This company may have unreliable free cash flow or operates in a business where invested capital costs increase substantially on a sporadic basis. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

PPC has created $33.93 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 109.30M 762.31M 895.25M 801.06M 483.02M
divided by
Invested Capital 2.12B 1.48B 1.80B 2.03B 2.02B
Cash ROIC 5.17% 51.37% 49.79% 39.43% 23.92%

Excellent Return on Equity over the past 5 years

Over the past 5 years, PPC has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

PPC has generated $37.88 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 174.04M 549.71M 711.44M 645.96M 439.73M
divided by
Stockholders' Equity 906.37M 1.49B 2.19B 1.26B 887.34M
Return on Equity 19.20% 36.90% 32.43% 51.31% 49.56%

Mediocre Business Performance over the past 10 years

PPC isn't a strong business and might be consistently attempting to fuel growth with debt or has trouble staying profitable. The lack of predictability in free cash flow should be concerning for the reliability of future earnings.

PPC has been unable to consistently create value for shareholders.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 291.64M -833.23M -13.19M -164.73M -264.96M 109.30M 762.31M 895.25M 801.06M 483.02M

Weak Balance Sheet

PPC's financial position is not ideal. The key is to check whether PPC is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 74.32M 71.99M 225.33M 107.63M 41.77M 68.18M 605.11M 576.14M 439.64M 120.33M
Current Assets 1.28B 1.45B 1.37B 1.71B 1.46B 1.54B 1.93B 1.89B 1.75B 1.32B
Total Assets 3.77B 3.30B 3.06B 3.22B 2.88B 2.91B 3.17B 3.12B 3.32B 3.01B
Current Liabilities 905.20M 2.71B 508.16M 738.64M 717.17M 730.18M 1.08B 744.86M 846.96M 868.30M
Total Liabilities 2.60B 2.95B 2.91B 2.15B 2.32B 2.01B 1.68B 925.17M 2.06B 2.12B
Stockholder' Equity 1.17B 351.74M 150.92M 1.07B 555.61M 906.37M 1.49B 2.19B 1.26B 887.34M
Current Ratio 1.42 0.53 2.69 2.32 2.04 2.11 1.78 2.53 2.06 1.52
TL-to-TA 0.69 0.89 0.95 0.67 0.81 0.69 0.53 0.30 0.62 0.71

Consistent Reinvestment of Profits over the past 10 years

PPC has consistently retained profits. This may put PPC in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, PPC can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 687.78M -317.08M -469.41M -348.65M -843.95M -669.71M -120.16M 591.49M -261.25M -520.64M
Retained Earnings Growth - -146.10% -48.04% 25.72% -142.06% 20.65% 82.06% 592.27% -144.17% -99.28%

Highly Competitive Industry over the past 10 years

It's likely that PPC is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely PPC invests heavily in R&D and Sales, General & Administrative expenses.

Only $1.28 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 47.02M -999.48M -85.89M 90.33M -495.69M 174.04M 549.71M 711.44M 645.96M 439.73M
divided by
Revenue 7.60B 8.53B 7.09B 6.88B 7.54B 8.12B 8.41B 8.58B 8.18B 7.93B
Net Profit Margin 0.62% -11.72% -1.21% 1.31% -6.58% 2.14% 6.54% 8.29% 7.90% 5.54%

Weak Pricing Power over the past 10 years

PPC is likely in a highly competitive industry, due to low barriers to entry. It's because of this, that PPC has been unable to raise prices and increase their profitability. This puts them in a poor position if inflation becomes an issue, as they would struggle to pass higher costs onto consumers.

Only $17.63 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 591.54M -163.50M 370.43M 460.99M 7.54B 435.83M 845.44M 1.39B 1.25B 914.36M
divided by
Revenue 7.60B 8.53B 7.09B 6.88B 7.54B 8.12B 8.41B 8.58B 8.18B 7.93B
Gross Margin 7.78% -1.92% 5.23% 6.70% 100.00% 5.37% 10.05% 16.24% 15.33% 11.53%

High Capital Intensity over the past 10 years

PPC spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

107.34% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 172.32M 152.50M 88.19M 179.33M 135.97M 90.33M 116.22M 171.44M 175.76M 272.47M
divided by
Net Income 47.02M -999.48M -85.89M 90.33M -495.69M 174.04M 549.71M 711.44M 645.96M 439.73M
Capital Expenditure Ratio 366.51% -15.26% -102.68% 198.54% -27.43% 51.90% 21.14% 24.10% 27.21% 61.96%

Inconsistent Dividend History over the past 10 years

PPC has started distributing dividends in the past couple years or has recently suspended their dividend distribution. The reliability of future distributions is unclear.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 5.99M 6.33M - - - - - - 1.50B 699.92M
divided by
Shares Outstanding 66.22M 69.34M 73.94M 214.28M 214.28M 250.22M 259.24M 259.47M 258.68M 254.13M
Dividend Paid Per Share 0.09 0.09 - - - - - - 5.79 2.75
Price at Year End 28.96 0.60 8.91 7.05 5.76 7.19 16.45 33.51 22.32 18.99
Dividend Yield 0.31% 15.21% - - - - - - 25.95% 14.50%

History of Stock Buybacks over the past 10 years

PPC has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 66.22M 69.34M 73.94M 214.28M 214.28M 250.22M 259.24M 259.47M 258.68M 254.13M
Stock Bought Back - -4.49% -6.23% -65.49% - -14.36% -3.48% -0.09% 0.31% 1.79%
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