Pilgrim’s Pride Corporation PPC, a leading poultry producer, has made significant strides in driving growth by diversifying its product portfolio and expanding its presence in both retail and foodservice markets. The company’s strategic focus on innovation, key customer partnerships, and cost efficiencies has paid off. However, the company is not immune to challenges like persistent inflationary pressures.

PPC’s Growth via Operational Excellence & Innovations

Pilgrim’s Pride is 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. The company’s focus on expanding its branded product portfolio and increasing distribution with key customers sets a strong foundation for future growth.

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.

Image Source: Zacks Investment Research

The company is also investing heavily in expansion and operational improvements. 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.

A key area of growth for Pilgrim’s Pride is the expansion of its U.S. Prepared Foods segment with innovative, differentiated products and increasing capacity to support this expansion. The company 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.

Foodservice Unit Positions PPC for 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.

Roadblocks on the Way for PPC

Despite these strengths, Pilgrim’s Pride faces challenges that could impact its growth. One of the most significant headwinds is the decline in U.S. broiler export volumes, which dropped 11.3% in the third quarter of 2024. This is largely due to a shift in production focus to meet domestic demand for dark meat, limiting supply for international markets. Furthermore, global economic uncertainties and increased competition from other protein sources could dampen the company’s export opportunities.

In addition, shifting consumer behavior driven by inflationary pressures could affect Pilgrim’s Pride’s performance. Consumers are purchasing less per trip and visiting stores more frequently, which could limit overall sales volumes. If economic conditions worsen, this trend may persist, impacting the company’s margins.

Final Words on Pilgrim’s Pride

The company is poised for growth with its focus on innovation and operational efficiency. However, challenges like declining export volumes and inflationary pressures could impact performance. Investors should stay watchful, but Pilgrim’s Pride’s strategic initiatives and market expansion offer promising long-term potential. At present, PPC carries a Zacks Rank #3 (Hold).

The company’s shares have gained 18.8% in the past six months compared with the industry’s growth of 5.7%.

Some Solid Staple Bets

We have highlighted three better-ranked stocks from the Consumer Staples sector, namely Ingredion Incorporated INGR, Freshpet FRPT and US Foods Holding Corp. USFD.

Ingredion Incorporated 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 carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

INGR has a trailing four-quarter earnings surprise of 9.5%, on average. The Zacks Consensus Estimate for Ingredion’s current financial year’s earnings indicates growth of 12.4% from the year-ago reported number.

Freshpet, a pet food company, presently 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 suggests growth of 27.2% and 228.6%, respectively, from the year-ago period’s reported figure.

US Foods, together with its subsidiaries, engages in the marketing, sale and distribution of fresh, frozen and dry food and non-food products to food service customers in the United States. It currently carries a Zacks Rank #2. USFD delivered a negative earnings surprise of 0.4% 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Freshpet, Inc. (FRPT) : Free Stock Analysis Report

Pilgrim's Pride Corporation (PPC) : Free Stock Analysis Report

Ingredion Incorporated (INGR) : Free Stock Analysis Report

US Foods Holding Corp. (USFD) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research