Pilgrim’s Pride is on track to turn a profit, compared with a steep year-ago loss, when it reports earnings on Friday, but uncertainty about industry production levels is clouding the company’s outlook, a Wall Street analyst said.
Stephens Inc. analyst Farha Aslam said U.S. poultry pounds produced were down 0.3 percent in the third quarter from a year ago, and head slaughter fell 1.6 percent. But bird weights rose 2.5 percent in August, 1.4 percent in September and 3.6 percent in October.
“Our industry channel checks indicate that many producers have made an effort to reduce bird weights to limit pounds produced rather than cutting head slaughtered, but thus far this has not shown up in the numbers,” she wrote in a note to clients.
Aslam expects Pilgrim's to post operating earnings of 14 cents per share in the third quarter, above the average analyst estimate of 6 cents and compared with a loss of 51 cents a year ago. She forecast Pilgrim’s sales up 2 percent to 3 percent.
Pilgrim’s U.S. sales are expected to rise slightly, to $1.7 billion to $1.8 billion. She sees chicken volume down 3 percent, but offset by a 5 percent increase in pricing to 88 cents per pound.
Aslam forecast Pilgrim’s Mexico sales to rise about 20 percent to $231 million to $232 million.
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