Pilgrim's Pride is approaching a buy point as the defensive stock's earnings are just around the corner. Earnings announcements tend to catalyze big moves higher or lower so it's important to pay attention to them.
Today's pick for IBD 50 Stocks To Watch, Pilgrim's Pride is set to release second-quarter earnings on Wednesday after the market closes. The Colorado-based firm is one of the world's largest poultry producers and has shown a strong track record of accelerating year-over-year EPS and sales growth in recent quarters.
Earnings for the defensive stock improved from 2% to 124% to 181% in the most recent quarters while sales growth grew from 24% to 30% in the two most recent quarters.
For the upcoming quarterly report, FactSet's consensus forecast is for earnings per share of $1.10 (a 75% increase year over year) on sales of $4.3 billion (up 18%). According to MarketSmith, analysts expect full-year EPS to jump 53% to $3.48 then fall 9% in 2023.
Pilgrim's Pride supplies poultry to a wide variety of retail and wholesale companies, including Yum Brands' KFC chain. Additionally, it supplies to major distributors like warehouse retailer Costco, Walmart and fast-food chain Wendy's .
In the firm's most recent earnings release, Pilgrim's Pride highlighted strong e-commerce momentum, citing that growth more than tripled year over year. Pilgrim's Pride also noted that recent long-term investments in automation at its operational facilities should continue to improve results and drive further earnings resilience.
Defensive Stocks Near Buy Points
The stock began consolidating in early June, when shares pulled back to find support at their 50-day moving average. Pilgrim's Pride stock remains just 7% below the 34.76 buy point, according to MarketSmith chart analysis. There's also a potential early entry above the 32.80 level for aggressive investors who want to start a small position and pyramid into a full position once PPC stock reaches the proper buy point.
PPC's relative strength line has been moving sideways for the past few weeks as the stock consolidated. But after a prior run-up of over 70%, a pause should be considered healthy action. Ideally, the RS line will push higher and notch a new high alongside the breakout.
Pilgrims's Pride stock is tied for the No. 1 spot with a few of its peers based on Composite Rating in the high-ranking meat products industry group. Cal-Maine Foods and Sanderson Farms also have perfect Composite Ratings of 99.
