Stock Story -
Chicken producer Pilgrim’s Pride (NASDAQ:PPC) missed analysts' expectations in Q1 CY2024, with revenue up 4.7% year on year to $4.36 billion. It made a non-GAAP profit of $0.77 per share, improving from its profit of $0.08 per share in the same quarter last year.
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Pilgrim's Pride (PPC) Q1 CY2024 Highlights:
- Revenue: $4.36 billion vs analyst estimates of $4.43 billion (1.5% miss)
- Adjusted EBITDA: $371.9 million vs analyst estimates of $342.9 million (8.5% beat)
- EPS (non-GAAP): $0.77 vs analyst estimates of $0.63 (22.1% beat)
- Gross Margin (GAAP): 8.8%, up from 4.2% in the same quarter last year
- Free Cash Flow of $162.6 million, similar to the previous quarter
- Market Capitalization: $8.53 billion
Offering everything from pre-marinated to frozen chicken, Pilgrim’s Pride (NASDAQ:PPC) produces, processes, and distributes chicken products to retailers and food service customers.
Perishable FoodThe perishable food industry is diverse, encompassing large-scale producers and distributors to specialty and artisanal brands. These companies sell produce, dairy products, meats, and baked goods and have become integral to serving modern American consumers who prioritize freshness, quality, and nutritional value. Investing in perishable food stocks presents both opportunities and challenges. While the perishable nature of products can introduce risks related to supply chain management and shelf life, it also creates a constant demand driven by the necessity for fresh food. Companies that can efficiently manage inventory, distribution, and quality control are well-positioned to thrive in this competitive market. Navigating the perishable food industry requires adherence to strict food safety standards, regulations, and labeling requirements.
Sales GrowthPilgrim's Pride is one of the largest consumer staples companies and benefits from a strong brand, giving it customer trust and leverage in many purchasing and distribution negotiations.
As you can see below, the company's annualized revenue growth rate of 12.6% over the last three years was solid for a consumer staples business.
This quarter, Pilgrim's Pride's revenue grew 4.7% year on year to $4.36 billion, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 4.4% over the next 12 months, a deceleration from this quarter.
Cash Is KingAlthough earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can't use accounting profits to pay the bills.
Pilgrim's Pride's free cash flow came in at $162.6 million in Q1, representing a 3.7% margin. This result was great for the business as it flipped from cash flow negative in the same quarter last year to positive this quarter.
Over the last eight quarters, Pilgrim's Pride has shown mediocre cash profitability, putting it in a pinch as it gives the company limited opportunities to reinvest, pay down debt, or return capital to shareholders. Its free cash flow margin has averaged 1%, subpar for a consumer staples business. However, its margin has averaged year-on-year increases of 4.8 percentage points over the last 12 months. Continued momentum should improve its cash flow prospects.
Key Takeaways from Pilgrim's Pride's Q1 Results We enjoyed seeing Pilgrim's Pride exceed analysts' adjusted EBITDA and EPS expectations this quarter. On the other hand, its revenue unfortunately missed analysts' expectations. Management added a silver lining, saying that thus far in 2024, "the U.S. continued to improve as Big Bird realized significant benefits from enhanced operational efficiencies and market fundamentals." Overall, this quarter's results were mixed. Investors were likely expecting more, however, and the stock is down 4.2% after reporting, trading at $33.89 per share.
