What Is Pilgrim's Pride Corporation's (NASDAQ:PPC) Share Price Doing?

Let's talk about the popular Pilgrim's Pride Corporation (NASDAQ:PPC). The company's shares saw a decent share price growth of 19% on the NASDAQGS over the last few months. The recent share price gains has brought the company back closer to its yearly peak. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Pilgrim's Pride’s outlook and value based on the most recent financial data to see if the opportunity still exists.

View our latest analysis for Pilgrim's Pride

Is Pilgrim's Pride Still Cheap?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. We find that Pilgrim's Pride’s ratio of 14.48x is trading slightly below its industry peers’ ratio of 17.83x, which means if you buy Pilgrim's Pride today, you’d be paying a reasonable price for it. And if you believe that Pilgrim's Pride should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. Furthermore, it seems like Pilgrim's Pride’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s priced similarly to industry peers. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Pilgrim's Pride look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Pilgrim's Pride, it is expected to deliver a negative earnings growth of -1.2%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? PPC seems priced close to industry peers right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on PPC, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on PPC for a while, now may not be the most optimal time to buy, given it is trading around industry price multiples. This means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on PPC should the price fluctuate below the industry PE ratio.

If you'd like to know more about Pilgrim's Pride as a business, it's important to be aware of any risks it's facing. For example, we've found that Pilgrim's Pride has 3 warning signs (1 is potentially serious!) that deserve your attention before going any further with your analysis.

If you are no longer interested in Pilgrim's Pride, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.