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On Monday, BMO Capital Markets updated their valuation of Pilgrim’s Pride Corporation (NASDAQ:PPC), increasing the price target to $48.00, up from the previous $47.00, while retaining a Market Perform rating on the stock. Currently trading at $50.1, the company has demonstrated remarkable strength with a 47% return over the past year. According to InvestingPro data, three analysts have recently revised their earnings estimates upward for the upcoming period. The adjustment comes after BMO Capital’s analyst attended Pilgrim’s Pride’s Investor Day, where the company’s management presented its growth strategy and capital allocation plans.
During the Investor Day, Pilgrim’s Pride announced a substantial special dividend of $6.30 per share, a move that underscores the company’s financial strength and commitment to returning value to shareholders. InvestingPro analysis reveals an impressive financial health score of 3.37 (rated as "GREAT"), with liquid assets exceeding short-term obligations and a healthy free cash flow yield of 13%. The management also detailed a comprehensive and achievable plan aimed at driving growth, enhancing margins, and reducing volatility in its operations.
The analyst from BMO Capital noted the positive outlook for Pilgrim’s Pride, citing the strong margin environment in the U.S. poultry sector as a key factor supporting an increase in the 2025 earnings per share (EPS) estimates. With a current P/E ratio of 10.84 and projected EPS of $5.33 for FY2025, the stock appears attractively valued according to InvestingPro’s Fair Value analysis. However, the firm chose to maintain its Market Perform rating despite the raised price target and optimistic EPS projection. Discover 8 more exclusive ProTips and comprehensive valuation metrics with an InvestingPro subscription.
Looking ahead, Pilgrim’s Pride is expected to embark on a capital expenditure cycle starting in 2025, which is anticipated to bolster the company’s strategic initiatives. While specific details about the scope and timeline of this investment were not provided, the analyst believes that a growth-focused capital expenditure of at least $1 billion spread over three to four years is a realistic expectation. This investment is projected to add approximately $0.50 or more to the company’s normal earnings.
The BMO Capital analyst concluded the commentary by reiterating the increased price target of $48, reflecting the positive developments and expectations for Pilgrim’s Pride’s financial performance in the coming years.
In other recent news, Pilgrim’s Pride announced a $1.5 billion special dividend, reflecting its strong balance sheet and commitment to shareholder value. This special payout is notable as the company typically does not pay regular dividends. In its fourth-quarter 2024 earnings report, Pilgrim’s Pride exceeded earnings per share expectations with $1.35 against a forecast of $1.12 but missed revenue projections, posting $4.37 billion compared to the expected $4.58 billion. BMO Capital Markets raised its price target for Pilgrim’s Pride to $47, citing a stronger-than-anticipated outlook for U.S. chicken margins through the first half of 2025. The company’s EBITDA for the quarter was $526 million, surpassing the consensus estimate, largely due to unexpected strength in the Mexican market. The upcoming Investor Day on March 14 is expected to provide further insights into how Pilgrim’s Pride will allocate its $2 billion in cash, with potential discussions around growth projects and additional dividends. The company’s strategic initiatives in product innovation and operational excellence were highlighted as key contributors to its performance.
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