Chicken producer Gold Kist (NASDAQ:GKIS) bills itself as the nation's third-largest integrated chicken company -- accounting for 9% of the chicken produced in 2003. This quarter's earnings report marks a milestone as it covers the last quarter the company operated as a cooperative.

Unlike Calavo (NASDAQ:CVGW), a former avocado cooperative that converted to a for-profit corporate format by issuing shares to its owners (and avoiding the entire initial public offering ritual), Gold Kist decided to sell 12 million new shares so it could take $119.4 million under its wing to repay debt and, with $45.8 million of existing cash, redeem equity in connection with the conversion to a for-profit corporation.

When compared with the nation's sixth-largest chicken producer, cash-rich former Motley Fool Stock Advisor recommendation Sanderson Farms (NASDAQ:SAFM), Gold Kist looks real plump with $282 million in pre-IPO debt. Although the company had $137 million in cash, its net debt would hardly be chicken feed when chicken prices fall -- as they inevitably will.

Gold Kist's trailing 12-month operating margins of 11% look downright sickly compared with Sanderson's 17% margins. But the 5% margins at the industry's No. 2 company, Pilgrim's Pride (NYSE:PPC), and the 4% margins at No. 1 (but beef-heavy) Tyson Foods (NYSE:TSN) do give Gold Kist investors something to cluck about.

Children might cringe at being called chicken, but investors should be wary of broiler (chicken) prices. Up 10.6% when compared with the year-ago quarter, they are down 9.1% when compared with the previous quarter (ended June 2004) -- and Gold Kist sees this pricing trend continuing through the end of the year. Falling soybean meal costs will help offset falling broiler prices, though.

The company earned $34 million ($0.68 a share) in the latest quarter. That's a lot of quarterly income for a stock selling for $13.90 a share.

On balance, Gold Kist looks interesting. Its operating margins are strong, although not industry-leading. It has IPO cash to strengthen its balance sheet. There's the falling soybean meal costs. Add it up, consider the extremely low price-to-earnings, and you'll discover the stock is bargain-priced.

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Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.