Shareholders of Pilgrim's Pride would probably like to forget the past six months even happened. The stock dropped 35.2% and now trades at $27.71. This was partly driven by its softer quarterly results and might have investors contemplating their next move.
Is now the time to buy Pilgrim's Pride, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think Pilgrim's Pride Will Underperform?
Even with the cheaper entry price, we’re cautious about Pilgrim's Pride. Here are three reasons why PPC doesn’t excite us, plus one stock we’d rather own.
1. Long-Term Revenue Growth Disappoints
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Pilgrim's Pride’s sales grew at a sluggish 2.6% compounded annual growth rate over the last three years. This fell short of our benchmarks.
2. Projected Revenue Growth Shows Limited Upside
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Pilgrim's Pride’s revenue to stall, a slight deceleration versus This projection is underwhelming and implies its products will face some demand challenges.
3. Low Gross Margin Reveals Weak Structural Profitability
At StockStory, we prefer high gross margin businesses because they indicate pricing power or differentiated products, giving the company a chance to generate higher operating profits.
Pilgrim's Pride has bad unit economics for a consumer staples company, signaling it operates in a competitive market and lacks pricing power because its products can be substituted. As you can see below, it averaged a 11.7% gross margin over the last two years. Said differently, for every $100 in revenue, a chunky $88.31 went towards paying for raw materials, production of goods, transportation, and distribution.
Final Judgment
Pilgrim's Pride doesn’t pass our quality test. Following the recent decline, the stock trades at 11.3× forward P/E (or $27.71 per share). This valuation multiple is fair, but we don’t have much confidence in the company. There are superior stocks to buy right now. Let us point you toward one of Charlie Munger’s all-time favorite businesses.
High-Quality Stocks for All Market Conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
