Fad diets may come and go, but most Americans are committed carnivores. Given the relative health and cost benefits of poultry vs. red meat, poultry producers are seeing demand for chicken increasing at a rate more than double that for red meats.

So the long-term picture for No. 2 poultry producer Pilgrim's Pride (NYSE:PPC) is all right, but what about the near term?

Pilgrim's Pride reported a solid fiscal second quarter on Monday morning. With pricing and volume basically counterbalancing, the company reported that sales for the quarter were down about 1% from the year-ago level.

On a more positive note, significantly lower feed prices (which make up about 25% of total cost of goods sold) led to much better margins. Gross margin improved from about 9% to 11.5% with corn and soy meal both trading about one-third lower than this time last year on the futures market. Most of this benefit dropped through the income statement, and the company saw operating margins rise from 4.4% to 6.5% in the quarter.

Though fresh-chicken sales were somewhat weak, particularly in the retail segment, the company made meaningful progress with its efforts to increase sales in the prepared-foods segment. Export sales were also strong, and the company continues to see growth from its Mexican operations.

As a somewhat distant No. 2 competitor to the king clucker clocker Tyson Foods (NYSE:TSN), Pilgrim's Pride certainly has room to grow -- particularly in its prepared-foods business. Not only do prepared foods generally carry a somewhat higher margin, but they are also somewhat less sensitive to the vagaries of commodity chicken prices.

Operating margins are improving, but they're still considerably lower than the levels seen by smaller producers like Sanderson Farms (NASDAQ:SAFM) and Gold Kist (NASDAQ:GKIS). A large national producer like Pilgrim's Pride will probably never be able to leverage its margins quite to the level of those small producers, but that doesn't mean there isn't room for improvement.

Worldwide demand for poultry shows no sign of abating, but Pilgrim's Pride is still essentially a commodity food company. As such, investors need to remember that normal historical P/E ratios for the stock range from the mid-single digits to the low-to-mid teens.

Trading at about 12 times trailing earnings, the stock looks like it's trading above the midpoint of its historical range and a little above its historic growth rate. Even though I do believe that Pilgrim's Pride is a quality company in a growing industry, I'd rather wait for a bargain price before buying shares.

Don't be chicken; feel free to click on these prior poultry Takes:

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