Pilgrim’s Pride (PPC) has been making efforts to expand its margins by reducing operational costs. Its other initiatives include enhancing labor efficiency, optimizing water usage, efficiently managing waste water, and maximizing productivity through correct plant maintenance.
Pilgrim’s Pride anticipates an operational improvement of $200 million through its cost-saving initiative and effective cash flow generation strategy. This ensures an overall improvement of stakeholder value over time with a focus on strengthening the company’s financial fundamentals.
Share repurchase program
After its 2Q15 earnings were released, Pilgrim’s Pride announced on July 29 that its board of directors approved a new $150 million share repurchase authorization for its common stock over the next 12 months. This initiative will reinforce the company’s commitment to create shareholder value. It will also reinforce the strength of the company’s balance sheet and operating cash flow.
Pilgrim’s Pride plans to implement its stock repurchase program through various means. This may include but aren’t limited to open market purchases, privately negotiated transactions, the use of derivative instruments, and accelerated share repurchase programs.
The extent to which the company repurchases its shares and the timing of the repurchases will vary and depend on market conditions and other corporate considerations, as determined by the company’s management team. The company has reserved the right to limit or terminate the repurchase program at any time without notice.
A major headwind for meat producers, including Pilgrim’s Pride, is the outbreak of the avian flu, which has caused supply chain problems. The company is also sensitive about the pricing of certain products, stiff competition from other rivals in the industry, and unfavorable currency fluctuations.
Its peers in the industry are J.M. Smucker (SJM), General Mills (GIS), and Tyson Foods (TSN). Pilgrim’s Pride reported a YTD (year-to-date) return of -31.39%, while J.M. Smucker, General Mills, and Tyson reported positive YTD returns of 16.3%, 9.0%, and 10.7%, respectively. The Compass EMP US Large Cap High Dividend 100 Volatility Weighted Index ETF (CDL) invests 0.37% of its portfolio in PPC.