Why Pilgrim's Pride Shares Popped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Pilgrim's Pride (NYSE: PPC ) were headed north today, after the chicken processor surprised analysts with profits well ahead of estimates.

So what: Pilgrim's Pride turned in a profit of $0.17 a share on expectations of just $0.07 cents, as analysts were concerned that rising feed prices would lead to higher costs. Revenues of $2.07 billion also topped expectations by about 5%, and the company also reduced its debt load by $317 billion, bringing it down to $1.1 billion. Management cited a shift in strategy owing to a $672 million increase in net income thus far in 2012.

Now what: If this company can string together more quarters like the one we just saw, this could be a steal. At a P/S of just 0.15, expectations for the stock are clearly low. Putting up steady profits, and reducing its debt payments, should be enough for the food supplier to keep pushing its share price higher.

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