Chickens don't fly particularly well, and poultry producer Pilgrim's Pride
That's a heckuva miss any way you slice it. The company blamed the performance on weakness in Mexico and a sharp drop in the price of leg quarters due to worries about avian influenza.
Here's the thing, though -- the numbers would suggest that there has to be a little more to it than just that. After all, Mexican sales are less than 10% of total revenue, and the same is true for export sales. Like as not, the weakness in leg quarter pricing has spread across the chicken market, and I wouldn't be surprised if the price of wings, breasts, and whole birds has fallen, as well.
In any event, investors should keep their eyes peeled for corroborating evidence. If business in Mexico is weak overall (as opposed to a problem specifically with Pilgrim's Pride), Industrias Bachoco
If weak export markets are hurting overall pricing, then this isn't going to be especially good news for any poultry producer -- even one like Sanderson Farms
Don't be chicken about clicking for more Foolish takes:
- Sanderson Farms' Ruffled Feathers
- GoldKist Gets the Kiss-Off
- Pilgrim's Pride Investors Turn Chicken on Outlook
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).