Home PPC Why is Pilgrim's Delight (PPC) down 1% because the final earnings report?

Why is Pilgrim’s Delight (PPC) down 1% because the final earnings report?

It has been about a month since the last Pilgrim’s Pride (PPC) earnings report. Stocks have lost about 1% over the period, trailing the S&P 500.

Will the recent negative trend last until the next earnings release, or is Pilgrim’s Pride poised to break out? Before we dive into the recent reaction from investors and analysts, let’s take a quick look at the latest earnings report to get a better handle on the key drivers.

Pilgrim’s Pride Q1 Results Exceed Estimates, Revenue Up Year Over Year

Pilgrim’s Pride reported impressive results for the first quarter of 2021, with the income statement increasing year on year. The uptrend is due to the product portfolio strategy, operational efforts and key customer strategy which have helped mitigate the impact of difficult market conditions amid the pandemic. Undeniably, healthy performance in all regions in which the company operates contributed to the results. Additionally, earnings for the quarter beat Zacks consensus estimate.

Pilgrim’s Pride reported adjusted earnings of 42 cents per share for the first quarter, up significantly from 12 cents in the year-ago quarter. In addition, the quarterly results beat Zacks’ consensus estimate of 27 cents. The company had net sales of $ 3,273.4, up 6.5% from the year-ago quarter. In Mexico, Great Britain, Europe and the USA in particular, net sales increased.

US net sales were $ 1,999.6 million, compared to $ 1,926.9 million for the year-ago quarter. The company said market conditions in the region improved during the quarter despite some severe weather-related challenges in the southeast in February.

In addition, the food service business has rebounded as pandemic-triggered restrictions are eased. The company’s retail and QSR operations remained strong due to solid demand, which was offset by higher input and operating costs and an unfavorable mix. The convenience food business in the US continues to gain momentum. The market for boning large raw birds also improved.

The Mexican business generated net sales of $ 419.1 million for the quarter, compared to $ 325.8 million in the prior-year quarter. Management announced that a normalization of the economic environment, a balanced supply / demand scenario and a higher proportion of non-commodity products will have a positive effect on the Mexican business. Notably, the demand for ready meals in the region also increased.

Net sales from operations in the UK and Europe increased to $ 854.7 million from $ 822.3 million in the prior-year quarter. The company emphasized that its combined European business continues to benefit from operational improvements, countered, among other things, by increased feed costs and a year-over-year decrease in food service volume. However, export restrictions to China were a cause for concern during the quarter.

Pilgrim’s Pride cost of sales increased from $ 2,897.8 million in the prior-year quarter to $ 3,012.2 million for the quarter. We find that gross profit increased from $ 177.1 million to $ 261.2 million. Additionally, Adjusted EBITDA was $ 253.8 million, up 53.4% ​​year over year. In particular, the adjusted EBITDA margin rose by 240 basis points to 7.8%.

The story goes on

Other financial details

Pilgrim’s Pride ended the quarter with cash and cash equivalents of $ 367 million, long-term debt (net of current maturities) of $ 2,350.4 million, and total equity of $ 2,735.8 million. Additionally, the company used $ 143.6 million as cash flow from operating activities for the three months ended March 28, 2021.

How have the estimates moved since then?

Analysts have been calm for the past two months as none of them issued a revision of earnings estimates.

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