Career switch: It looks like it's time to switch off the computer, buy a straw hat, and start raising chickens. After all, with Atkins-crazed Americans chewing up chicken at alarming rates, there's big money in the poultry business. Today, Pilgrim's Pride (NYSE: PPC), the No. 2 poultry producer in the U.S. and the second-place chicken hawker in Mexico, laid a golden egg, inking per-share profits that doubled what analysts had expected.
For the second fiscal quarter, the firm posted $0.50 per share, more than double last year's $0.24. Sales hit $1.4 billion, nearly twice the number from last year.
Much of the increase was due to the shrewd purchase of ConAgra's (NYSE: COG) chicken business last fall, operations that are already contributing to the top and bottom lines. You have to wonder if ConAgra execs are peeking at these numbers. "Doh!"
Back in early February, when avian flu was causing a bit of a panic, slaughtering both birds and stock prices, Fool chicken expert W.D. Crotty -- who shares his homestead with a handful of the winged beasts -- pointed out the folly in dumping shares. It looks like he was right. Tyson Foods (NYSE: TSN) -- which released impressive numbers today -- and former Motley Fool Stock Advisor pick Sanderson Farms (Nasdaq: SAFM) have all pounded the S&P 500 since then, and they've really crushed the index over the past year.
Woulda, shoulda, coulda. Is there any value left in the bird game? That's harder to judge. Pilgrim's Pride today announced restructuring in its turkey business that could result in some impressive savings over the long haul. The firm carries a pretty hefty $643 million in debt, but it has been earning more than enough to cover the interest payments.
Deciding what the stock is worth is the problem. The trailing P/E of around 16 looks fair to rich for a food producer, but Pilgrim's Pride's earnings growth -- along with Tyson's -- has outrun analyst estimates for a while, and investors have jumped on board. There may be bigger earnings ahead, but if chicken prices take a slide, the stocks could go along.
Swap chicken stories on the Fool's Low Carb Way of Life discussion board.
Fool contributor Seth Jayson is pretty sure that chickens are just ill-tempered, feathered lizards, but he eats 'em anyway. He has no stake in any firm mentioned above. View his Fool profile here.
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