Investment Thesis
Pilgrims Pride exhibits concerning cash flow deterioration with negative free cash flow of -$95.4M despite positive operations, indicating capital expenditures are structurally unsustainable relative to earnings generation. Razor-thin net margins of 2.2% combined with anemic returns on equity (2.7%) and assets (1.0%) reflect commodity business pressures with insufficient profitability to justify capital intensity.
Strengths
- Revenue growth of 3.5% YoY demonstrates market demand and operational scale
- Positive operating cash flow of $140.8M from core business operations
- Moderate leverage at 0.83x debt-to-equity ratio with 4.3x interest coverage ratio
Risks
- Negative free cash flow of -$95.4M indicates capex exceeds sustainable cash generation, requiring external financing or asset sales
- Quick ratio of 0.73x signals liquidity stress and limited financial flexibility for operational needs
- Flat net income growth (-0.1% YoY) despite revenue growth indicates margin compression and operational underperformance in commodity poultry sector
Key Metrics to Watch
- Free cash flow trajectory and capex requirements relative to operating cash generation
- Gross and net margin trends amid commodity input cost volatility
- Liquidity position and debt covenant compliance if FCF remains negative
Financial Metrics
Revenue
4.5B
Net Income
101.4M
EPS (Diluted)
$0.43
Free Cash Flow
-95.4M
Total Assets
10.2B
Cash
542.4M
Profitability Ratios
Gross Margin
7.6%
Operating Margin
3.6%
Net Margin
2.2%
ROE
2.7%
ROA
1.0%
FCF Margin
-2.1%
Balance Sheet & Liquidity
Current Ratio
1.48x
Quick Ratio
0.73x
Debt/Equity
0.83x
Debt/Assets
63.4%
Interest Coverage
4.30x
Long-term Debt
3.1B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T16:06:55.387087 |
Data as of: 2026-03-29 |
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