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Pilgrim's Pride (PPC) to Post Q3 Earnings: What to Expect?

Pilgrim's Pride Corporation PPC is scheduled to report third-quarter 2017 results on Nov 7, after the market closes.

Over the last three months, shares of this Zacks Rank #1 (Strong Buy) company yielded a return of 24.2%, outperforming 7.7% growth recorded by the industry.

We note that the company’s second-quarter 2017 adjusted earnings of 93 cents per share surpassed the Zacks Consensus Estimate of 85 cents. However, it recorded a negative average earnings surprise of 11.42% over the last four quarters.

Let’s see how things are shaping up prior to this announcement.

Factors to Play

Solid demand for organic and Antibiotic-Free chicken products is expected to improve Pilgrim's Pride's revenues in the upcoming quarters. Moreover, elevated product prices (stemming from increased demand for U.S. chicken products across all overseas markets) are anticipated to drive the company’s top-line growth, going forward.

The company believes its revenues and profitability in Mexico will improve on the back of increased demand for the recent products rolled out under the Del Dia brand.  In addition to this, the launch of fully-cooked sausages under the Gold'n Plump brand (May 2017) is anticipated to boost its sales and margins in the United States and Mexico.

Pilgrim's Pride predicts that strategic acquisitions will strengthen its top-line in the near term. For instance, the GNP Company acquisition (January 2017) will continue to bolster the company's sales in the upcoming quarters. Also, the latest Moy Park buyout (September 2017) is projected to reinforce the company's prepared foods and poultry production business, going forward.

However, lingering industry headwinds might partially dent the company’s top- and bottom-line results in the upcoming quarters. Pilgrim’s Pride’s profitability is highly sensitive to market price as well as availability of certain products such as soybean meal, corn and sorghum. Any sudden supply-demand imbalance or fluctuations in price of these materials might significantly flare up the company’s operational expenses, in turn, depressing its revenues in the quarters ahead.

Furthermore, intense industry rivalry or sudden outbreak of livestock diseases in the meat industry remain other causes of concern.

Earnings Whispers

Our proven model does not conclusively show that Pilgrim's Pride will likely beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 (Buy) or at least 3 (Hold) for this to happen. That is not the case here as we will see below.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks ESP: Pilgrim's Pride currently has an Earnings ESP of 0.00%. This is because both the Zacks Consensus Estimate and the Most Accurate estimate are pegged at 78 cents.

Zacks Rank: Pilgrim's Pride has a favorable Zacks Rank #1. However, the company’s Earnings ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Key Picks

Here are some stocks that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Avon Products, Inc. AVP, with an Earnings ESP of +2.94% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Energizer Holdings, Inc. ENR, with an Earnings ESP of +0.35% and a Zacks Rank #2.

The Hain Celestial Group, Inc. HAIN, with an Earnings ESP of +5.22% and a Zacks Rank #2.

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