Chicken producer Pilgrim’s Pride (NASDAQ:PPC) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 3.8% year on year to $4.76 billion. Its non-GAAP profit of $1.52 per share was 9.9% above analysts’ consensus estimates.
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Pilgrim's Pride (PPC) Q3 CY2025 Highlights:
- Revenue: $4.76 billion vs analyst estimates of $4.72 billion (3.8% year-on-year growth, 0.8% beat)
- Adjusted EPS: $1.52 vs analyst estimates of $1.38 (9.9% beat)
- Adjusted EBITDA: $633.1 million vs analyst estimates of $588.6 million (13.3% margin, 7.6% beat)
- Operating Margin: 10.4%, in line with the same quarter last year
- Free Cash Flow Margin: 5.8%, down from 11.9% in the same quarter last year
- Market Capitalization: $9.02 billion
“Throughout the quarter, chicken demand remained robust across retail and foodservice given its strong value proposition compared to other proteins," said Fabio Sandri, Pilgrim’s President and CEO.
Company Overview
Offering everything from pre-marinated to frozen chicken, Pilgrim’s Pride (NASDAQ:PPC) produces, processes, and distributes chicken products to retailers and food service customers.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $18.35 billion in revenue over the past 12 months, Pilgrim's Pride is larger than most consumer staples companies and benefits from economies of scale, enabling it to gain more leverage on its fixed costs than smaller competitors. Its size also gives it negotiating leverage with distributors, allowing its products to reach more shelves. However, its scale is a double-edged sword because there are only so many big store chains to sell into, making it harder to find incremental growth. To expand meaningfully, Pilgrim's Pride likely needs to tweak its prices, innovate with new products, or enter new markets.
As you can see below, Pilgrim's Pride’s sales grew at a sluggish 1.8% compounded annual growth rate over the last three years. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.
This quarter, Pilgrim's Pride reported modest year-on-year revenue growth of 3.8% but beat Wall Street’s estimates by 0.8%.
Looking ahead, sell-side analysts expect revenue to decline by 1.7% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and implies its products will see some demand headwinds.
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Cash Is King
Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.
Pilgrim's Pride has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 6.4% over the last two years, slightly better than the broader consumer staples sector.
Taking a step back, we can see that Pilgrim's Pride’s margin dropped by 3.7 percentage points over the last year. If its declines continue, it could signal increasing investment needs and capital intensity.
Pilgrim's Pride’s free cash flow clocked in at $276.5 million in Q3, equivalent to a 5.8% margin. The company’s cash profitability regressed as it was 6.1 percentage points lower than in the same quarter last year, suggesting its historical struggles have dragged on.
Key Takeaways from Pilgrim's Pride’s Q3 Results
We were impressed by how significantly Pilgrim's Pride blew past analysts’ EPS expectations this quarter. We were also glad its gross margin outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The market seemed to be hoping for more, and the stock traded down 1.4% to $37.60 immediately after reporting.
So do we think Pilgrim's Pride is an attractive buy at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.