Apparently, the fast-paced and dynamic world of chicken was even more dynamic than we all thought in this recent quarter. On Monday, the country's second-leading chicken producer, Pilgrim's Pride (NYSE:PPC), surprised the Street by offering a considerable boost to guidance for the upcoming quarter.
Instead of the company's previous anticipated range of $0.81 to $1.00 per share in earnings, the company said it is now expecting $1.17 to $1.22. That's well above the prior mean estimate of $0.93 and would amount to something on the order of 60% growth over last year's $0.75 in earnings.
As good as that news is, it would have been even better to hear how the company achieved that result. Beyond stating that results were better in both U.S. and Mexican operations, the press release was notably devoid of details.
But that doesn't mean that we Fools are left flailing helplessly. Take a gander at commodity grain prices, and you'll see that they were a heckuva lot lower in this past quarter than they were in the year-ago period. Since feed is 25% of the cost of goods, that's certainly a help. Cluck!
What's more, chicken prices haven't come down much at all. Since hitting record prices a year ago, bits of butchered bird are down by only a few percentage points or so. Whether it's the relatively high prices of beef and pork or simply an ongoing preference for the fowl, folks are eating chicken and pricing is staying pretty firm. Cluck cluck!
Pilgrim's Pride is now trading at its 52-week high and at a P/E that exceeds the growth rate that analysts believe the company can achieve over the next three to five years. If, in fact, chicken-market fundamentals are strong, investors might want to also look at the likes of Motley Fool Stock Advisor recommendation Sanderson Farms (NASDAQ:SAFM), Gold Kist (NASDAQ:GKIS), Industrias Bachoco (NYSE:IBA), or Perdigao (NYSE:PDA) before sinking their chicken feed into a poultry producer.
For more fowlish takes:
- KFC's Secret to Sales Success
- Pilgrim's Pride Clucks In
- McDonald's Isn't Chicken
- Pilgrim's Pride Feeds on Firm Prices
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
