Why Pilgrim's Pride (PPC) Stock Is Down Today

NEW YORK (TheStreet) -- Pilgrim's Pride (PPC) was falling -5.8% to $24.74 Monday after withdrawing its takeover proposal for Hillshire Brands (HSH).

Tyson Foods (TSN) increased its offer for Hillshire to $8 billion, or $63 a share, prompting Pilgrim's to withdraw its bid for the company. Pilgrim's Pride and Tyson previously tried to outbid one-another for Hillshire. Pilgrim's Pride last bid was $55 a share.

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TheStreet Ratings team rates PILGRIM'S PRIDE CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate PILGRIM'S PRIDE CORP (PPC) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, notable return on equity and attractive valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 80.95% and other important driving factors, this stock has surged by 127.89% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, PPC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 79.8% when compared to the same quarter one year prior, rising from $54.58 million to $98.12 million.
  • The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.07, which illustrates the ability to avoid short-term cash problems.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Food Products industry and the overall market, PILGRIM'S PRIDE CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: PPC Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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