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Pilgrims Pride Corp PPC Stock Quote

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Morningstar‘s Stock Analysis PPC

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No-Moat Pilgrim's Pride Continues to Benefit From Strong Demand and Elevated Chicken Price

Rebecca Scheuneman, CFA Senior Equity Analyst

Business Strategy and Outlook

| Rebecca Scheuneman, CFA |

Although Pilgrim’s Pride is the second-largest poultry producer in the countries in which it operates, we don’t believe it has carved out an edge. About 80% of Pilgrim’s products are undifferentiated and therefore have difficulty commanding price premiums and higher returns. Further, its profit margins can be quite volatile, as several factors outside the firm’s control affect costs (weather, flock disease, global trade). Prices of feed ingredients can be quite volatile, surging in 2008 and leading to Pilgrim’s bankruptcy. Since then, the industry has moved to new pricing strategies, which are helping protect the processors from revenue/cost mismatches. However, despite Pilgrim’s size, we don’t believe this affords it a scale cost advantage, underpinning our no-moat rating.

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Company Profile PPC

Business Description

Pilgrim’s Pride is the second-largest poultry producer in the U.S. (62% of 2021 sales), Europe (26%), and Mexico (12%). The 2019 purchase of Tulip, the U.K.'s largest hog producer, marks the firm's entrance into the pork market, which represents about 10% of sales. Pilgrim's sells its protein to chain restaurants, food processors, and retail chains. Channel exposure is split evenly between retail and food service, with the majority of food-service revenue coming from quick-service restaurants. JBS owns 80% of Pilgrim’s outstanding shares; it attempted to purchase the remaining 20% in late 2021, but the board rejected JBS's $26.50 offer as inadequate, and we concur.

1770 Promontory Circle
Greeley, CO, 80634-9038
T +1 970 506-8000
Industry Packaged Foods
Most Recent Earnings Jun 30, 2022
Fiscal Year End Dec 25, 2022
Employees 60,000

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