Pilgrim’s Pride Corporation PPC has captured investors' attention with an extraordinary 50.2% surge in its stock price over the past six months. This performance outperforms the 15.6% growth of the Zacks Food - Meat Products industry, the Consumer Staples sector's modest 1.2% gain, and the broader S&P 500’s 12.8% increase during this time frame. This rally raises an important question: Is the stock still a good buy after such a steep climb?

The company’s rise stems from its operational excellence, strategic partnerships and innovation-driven growth, all supported by robust financial results. With impressive third-quarter 2024 earnings results and a well-rounded growth strategy, Pilgrim’s Pride has positioned itself as a prominent player in the food space. 

Let’s delve deeper into the factors driving this growth and whether the stock has more room to run.

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Operational Excellence Powers PPC’s Growth

Pilgrim’s Pride has been gaining on operational excellence, portfolio diversification and the development of strategic partnerships with key customers to enhance consumer value. The company’s focus on key customers is a pathway for refining its portfolio and creating competitive advantages over its peers. Its focus on quality, service and innovation is evident in its third-quarter 2024 performance, wherein the top and bottom lines increased year over year.

Looking ahead, the company's strategic initiatives and operational efficiencies are expected to drive continued growth. The U.S. Department of Agriculture projection of nearly 1.7% growth in the U.S. chicken production for the full year, coupled with its ability to leverage its diversified portfolio and cost management strategies, positions the company for sustained profitability. The company’s focus on expanding its branded product portfolio and increasing distribution with key customers sets a strong foundation for future growth.

Pilgrim’s Pride’s Foodservice Growth

The foodservice distribution channel for Pilgrim's Pride continued its trend of higher volume and revenues in both commercial and non-commercial foodservice distribution subchannels in the third quarter of 2024. The commercial distribution sub-channels saw large dollar increases, while non-commercial experienced steady growth, driven by rising business and industry activity. Among foodservice sub-channels, Quick Service Restaurants saw volume growth, reflecting consumers' preference for more budget-friendly meal options. The foodservice growth underscores Pilgrim's Pride’s effective strategies and robust market positioning in the foodservice segment.

PPC’s Innovation & Investments: Major Catalysts

Innovation is at the heart of Pilgrim’s Pride’s growth strategy. The company launched over 280 new products during the third quarter of 2024, many of which have received industry recognition for their quality and innovation. The company's new product pipeline has generated considerable interest in the marketplace. This focus on developing differentiated, consumer-centric offerings has not only enhanced the company’s product portfolio but also strengthened its market position in both retail and foodservice segments.

Pilgrim's Pride is driving growth through significant investments in expansion and operational efficiencies. In the third quarter of 2024, the company spent $104 million on capital expenditures, with plans to continue investing in strategic projects into 2025. These efforts focus on optimizing its product mix, strengthening partnerships with key customers, improving operational efficiency and advancing sustainability initiatives. The company emphasizes disciplined capital allocation, projecting a total capital expenditure of around $475 million for the full year.

The company’s growth strategy includes expanding its U.S. Prepared Foods segment with innovative, differentiated products and increasing capacity to support this expansion. Pilgrim's Pride is also investing in enhancing protein conversion capacity to reduce dependence on external operators. In addition, the company is tapping into strong growth opportunities in Mexico, particularly in the fresh and prepared food sectors. These initiatives align with Pilgrim’s Pride's broader goals of portfolio diversification, focusing on key customers and achieving operational excellence.

Is Pilgrim’s Pride Stock a Buy?

Pilgrim’s Pride has demonstrated strong growth, fueled by operational excellence, strategic partnerships and innovative initiatives. With continued investments and a robust growth strategy, PPC stock shows significant potential heading into 2025. These factors position Pilgrim’s Pride as an attractive opportunity for investors seeking long-term growth in the food industry. At present, PPC carries a Zacks Rank #2 (Buy).

Other Solid Food Picks

Ingredion Incorporated INGR manufactures and sells sweeteners, starches, nutrition ingredients and biomaterial solutions derived from wet milling and processing corn and other starch-based materials. The company currently sports a Zacks Rank #1 (Strong Buy). INGR has a trailing four-quarter earnings surprise of 9.5%, on average.

You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ingredion’s current financial year’s earnings indicates growth of 12.5% from the year-ago reported number.

Freshpet Inc. FRPT manufactures, distributes and markets natural fresh meals and treats for dogs and cats. It currently carries a Zacks Rank #2. FRPT has a trailing four-quarter earnings surprise of 144.5%, on average.

The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings implies growth of 27.3% and 224.3%, respectively, from the prior-year reported levels.

US Foods Holding Corp. USFD, together with its subsidiaries, engages in the marketing, sale and distribution of fresh, frozen and dry food and non-food products to foodservice customers in the United States. It currently carries a Zacks Rank #2. USFD delivered an earnings surprise of 3.7% in the last reported quarter.

The Zacks Consensus Estimate for US Foods Holding’s current fiscal-year sales and earnings indicates growth of 6.4% and 18.6%, respectively, from the prior-year reported levels.

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