PILGRIM’S PRIDE CORPORATION (PPC): what the price requires
The current priced-in claim for PILGRIM’S PRIDE CORPORATION (PPC) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/PPC
Headline
| Field | Value |
|---|---|
| Ticker | PPC |
| Company | PILGRIM’S PRIDE CORPORATION |
| Current price | $28.45/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 4.3% |
| Operating margin today | 8.5% |
| Margin compression implied | -4.2pp |
| Multiple paid | 6x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.48σ |
| cohort percentile (of 69 peers) | 1 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.71x | 5 | justifies |
| Earnings | 1.13x | 5 | expensive |
| Relative | 0.26x | 3 | justifies |
| Growth | 0.95x | 3 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.3%); the inversion above states its own rate.
Per-Model Detail (n=16)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $37.58 | 0.76x | yes | FCF base $0.5B, growth 3% (input: historical growth), terminal g 3.3%, WACC 9.3%, 5yr projection |
| DCF Exit Multiple | Growth | $30.01 | 0.95x | yes | Exit EV/EBITDA: 4.0x / 3.5x / 5.5x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $69.69 | 0.41x | yes | P/E 16.26x (blended: static sector reference 22x + trailing (TTM) 8x), scenarios: 13.7x / 16.3x / 18.8x (bear / base = reference held flat / bull), EV/EBITDA 9.81x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $40.23 | 0.71x | yes | BV/sh $15.61, ROE (TTM) 23.8%, ke 9.3% |
| Two-Stage Excess Return | Asset | $64.63 | 0.44x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $20.52 | 1.39x | yes | Rev $18.6B, growth 3% (input: historical growth; tapered), Terminal P/S: 0.3x / 0.4x / 0.4x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $38.79 | 0.73x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.09B × (1−23%) / WACC 9.3% → EPV (no growth) |
| Residual Income | Asset | $58.92 | 0.48x | yes | BV $15.61 + 5yr PV of (ROE (TTM) 23.8% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $36.19 | 0.79x | yes | √(22.5 × EPS $3.73 × BVPS $15.61) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $109.30 | 0.26x | yes | EBITDA $1.84B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $25.22 | 1.13x | yes | FCF $529.7M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $23.93 | 1.19x | yes | SBC-adj FCF $0.50B (FCF $0.53B − SBC $0.03B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $3.13 | 9.09x | yes | EPS $3.73 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $6.09 | 4.67x | yes | BV $15.61 × (ROIC 3.6% / WACC 9.3%) |
| P/Sales Sector | Relative | $155.66 | 0.18x | yes | Revenue $18.57B × sector P/S 2.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $40.32 | 0.71x | yes | EPS $3.73 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $2.7b |
| Net debt / NOPAT (after-tax) | 2.20x |
| Net debt / operating income (pre-tax) | 1.70x |
| Interest coverage | 9.8x |
| Share count CAGR (buyback) | -0.6% |
| Burning cash | no |
Bullet Takeaways
- Pilgrim's Pride is one of the largest chicken producers in the world, majority-owned by JBS. It is a commodity protein business whose earnings swing with the spread between chicken prices and feed costs, so the cycle, not the company, drives the result.
- The catch is timing. Margins have just rolled over from a peak, with adjusted EBITDA margin falling to 6.8% from 12% a year ago. The cheapness is the market pricing in the down leg of the cycle, which is the central tension.
Bull Case
Valuing a chicken producer is its own discipline, because the earnings are not a smooth compounding stream; they are the output of a commodity spread that swings hard. The right way to read Pilgrim's Pride is through the cycle, not at a point in it, and through that lens the price looks low. At $27.33 (June 27, 2026) the market is paying only about 6 times operating income, a multiple so depressed that the price sits below what even a modest operating-profit decline would warrant. For a business with a strong balance sheet, that is a wide margin between price and the methods.
The balance sheet and scale are the durable parts. Pilgrim's carries net debt of about $2.7 billion against roughly $1.37 billion of trailing operating income, with interest coverage near 8.7 times, so leverage is moderate for a protein company and the interest burden is well covered. As one of the largest vertically integrated chicken producers, with operations across the U.S., U.K., Europe, and Mexico, the company has the cost position to survive the trough that smaller producers cannot. Vertical integration, owning the feed mills, hatcheries, and processing, is the cost moat in a commodity business.
The strategic shift is the upgrade to the story. Management is leaning into value-added prepared and branded products to dampen the commodity swings, building out the Just BARE and Pilgrim's brands and tray-pack offerings. The filing notes that "Our Pilgrim's Food Masters business has a number of well-recognized brands with significant market presence" and that the company has "made efforts to increase the market share of our Just Bare and Pilgrim's brands in the U.S. market" (FY2025 10-K). Every dollar of revenue that moves from raw commodity chicken to branded prepared food is a dollar with steadier margins, which over time should narrow the discount the market applies to the cyclical core.
Bear Case
The qualitative truth first: a chicken producer is cheapest precisely when its margins are highest, because the market knows the cycle will turn. Pilgrim's just printed the kind of result that defines the down leg. Adjusted EBITDA margin fell to 6.8% in the first quarter of 2026 from 12% a year earlier, net income dropped roughly two-thirds, and management pointed to volatility in commodity chicken markets. The low headline multiple is not a free lunch; it is the market pricing in normalization off a peak. A six-times multiple on peak-ish earnings can become a twelve-times multiple on trough earnings without the stock moving, and that is the classic trap in commodity protein.
The structural exposure is the feed-and-price spread, which management does not control. The filing is explicit that grain costs swing the business: in 2025 "corn, soybean meal and wheat accounted for approximately 45.9%, 33.7% and 4.6% of our feed costs," and there can be "no assurance that the price of grains will not rise" given demand from ethanol, biodiesel, and global consumption (FY2025 10-K). When grain prices rise or chicken prices fall, the spread compresses and earnings can halve in a quarter. Industry overproduction, which tends to follow a profitable year, is the mechanism that turns the cycle, and stronger U.S. and global poultry supply is exactly the risk on the table now.
The governance and concentration overhang is the third. Pilgrim's is majority-controlled by JBS, so minority holders sit alongside a parent whose interests may not always align with theirs, and capital allocation, including the timing and form of dividends, reflects that control. The value-added shift is real but still a minority of the mix, so the company remains, for now, a commodity processor. The bear case does not require the company to be badly run; it only requires the chicken cycle to do what it always does. With margins already rolling over, the price that looks cheap on trailing numbers may simply be fair on normalized ones.
Valuation
The peer-multiple methods are the most generous, placing fair value far above the quote, while the free-cash-flow methods sit closer to the price. The spread between the price and the methods is unusually wide, which is what produces the cheap screen.
Inverting the price into the assumption it embeds, the market is paying about 6 times company-wide operating income, a multiple so low that the price sits below what even a 5% per year operating-profit decline would warrant. That is a bound, not a solved growth rate: the price is effectively assuming earnings shrink from here, consistent with a cycle that has turned. Against the company's own history the implied pace is within range. So the methods say cheap, and the inversion says the market expects the down leg.
The honest read is that the disagreement between the low multiple and the higher method-based values is the cycle itself. If earnings are near a normalized level, the stock is genuinely undervalued. If the first quarter marks the start of a deeper trough, today's six-times multiple is closer to fair on normalized earnings than it looks. The decisive variable is the chicken-to-feed spread, which neither the company nor the model can forecast.
Catalysts
The dominant catalyst is the chicken cycle, read through quarterly margins. First-quarter 2026 results showed sales roughly flat at about $4.53 billion but net income down about 66% to $101.4 million, with adjusted EBITDA margin compressing to 6.8% from 12% a year earlier on commodity chicken volatility and one-time operational disruptions. The trajectory of the chicken-to-feed spread, driven by U.S. and global poultry supply and by corn and soybean meal prices, is the single variable that will determine the next several quarters.
The strategic catalyst is the shift toward value-added and branded prepared foods. Management is investing in stable product categories and expanding Just BARE, Pilgrim's, and tray-pack offerings to differentiate and steady the margin profile, alongside a heavy 2026 capital expenditure plan of $900 million to $950 million. Progress on lifting the branded mix is the slow-burn driver that could re-rate the multiple over time.
The watch items are feed-cost inflation, industry overproduction that compresses the spread, and the JBS control dynamic that shapes capital allocation and dividend policy. Analyst sentiment is a Hold, with price targets clustered around $40 to $43, above the current price, reflecting the view that the shares are cheap on normalized earnings but exposed to a softening cycle. Any sign of supply discipline or feed-cost relief would be the positive surprise.
Sources:
- https://www.investing.com/news/transcripts/earnings-call-transcript-pilgrims-pride-misses-q1-2026-eps-forecast-stock-rises-93CH-4650193
- https://simplywall.st/stocks/us/food-beverage-tobacco/nasdaq-ppc/pilgrims-pride/news/how-investors-may-respond-to-pilgrims-pride-ppc-earnings-hit
- https://www.fool.com/earnings/call-transcripts/2026/04/30/pilgrims-pride-ppc-q1-2026-earnings-transcript/
- https://stockanalysis.com/stocks/ppc/forecast/
- https://www.wallstreetzen.com/stocks/us/nasdaq/ppc/stock-forecast
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- TSN (TYSON FOODS, INC.)
- (no filing in the citation store)
- SFD (SMITHFIELD FOODS, INC.)
- (no filing in the citation store)
- HRL (HORMEL FOODS CORPORATION)
- (no filing in the citation store)
- ADM (ARCHER-DANIELS-MIDLAND CO)
- (no filing in the citation store)
- BG (BUNGE GLOBAL SA)
- (no filing in the citation store)
- LW (Lamb Weston Holdings, Inc.)
- (no filing in the citation store)
- INGR (INGREDION INCORPORATED)
- (no filing in the citation store)
- CAG (CONAGRA BRANDS, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.