Once you're buried in chicken guano, there's not much to do but grab a shovel and start digging for daylight. Sharp drops in the price of chicken have lowered the boom on Piligrim'sPride's (NYSE:PPC) results, and it looks like there's a chance that this stock may be on the way toward retesting its historical low valuation.

Of course, none of us really thought that this quarter was going to be very good -- not after the company lowered its guidance earlier in the month. I don't think too many people were surprised that sales dropped about 2%, operating income dropped more than 49%, and earnings per share fell 47% for the quarter.

What I think is a bit more of a surprise, though, is that the company lowered guidance for the remainder of the year as well. Stuck between the twin specters of higher costs (particularly for packaging and energy) and lower meat prices, management talked down guidance for the next quarter and the year as a whole.

Based on information provided by the company, we see that prices (as of Jan. 20) have fallen 5% for whole birds, 17% for leg quarters, 15% for wings, and 32% for breasts. Even if you figure that crop prices are going to be flat to slightly down, that's a tough environment in which to grow profits. Oh, and here's some more not-so-good news -- storage inventories are up 18% sequentially (and 13% over last year). Even when the export market picks up, there will be excess inventory to work off first.

I'm not too proud to say that I'm not really sure what to do with the stock. Pilgrim's Pride has been at this a while, and I'm confident that this company will eventually turn things around. I'm also confident that consumers around the world will continue to consume more animal protein. Still, it's hard for me to say "buy" when considering that a return to past trough valuations could mean there's still as much as 50% left to lose.

Nevertheless, I'm keeping an eye on the likes of Brazilian companies Perdiago (NYSE:PDA) and Sadia (NYSE:SDA), as well as U.S.-based Sanderson Farms (NASDAQ:SAFM). Today may not be the day to make a leap of faith into the chicken coops, but it often pays to be ready just in case.

Further Foolish pontification on poultry and protein:

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).