Why Pilgrim's Pride Shares Popped

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 chicken-processor Pilgrim's Pride (NASDAQ: PPC  ) were looking tasty today, jumping 10% after its larger rival Tyson Foods (NYSE: TSN  ) beat earnings estimates and forecasted higher chicken prices.

So what: In its earnings report, Tyson said meat production would continue to shrink this year, and demand for chicken has been growing as consumers switch from beef. It tripled operating profit in its chicken segment in the quarter, and said that chicken prices climbed 8.2% in the period. Last summer's drought in the Midwest has hurt livestock production across the board, and beef, in particular, and Tyson forecasted a 1% decline in beef, pork, and poultry production for the year.

Now what: Pilgrim's Pride reports earnings February 15th, and clearly the bar just got raised. Analysts had been expecting a $0.06 loss as the industry is seasonal, but will probably raise their expectations after today's news. I don't see any long-term competitive advantage in Pilgrim's Pride, but in the near term, the company looks poised to benefit from the drought and higher poultry prices.

Find out what happens next with Pilgrim's Pride. Click here to add the stock to your Watchlist.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2231869, ~/Articles/ArticleHandler.aspx, 4/19/2014 2:59:00 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement