Here's what PPC looks like as a new model for the PIC/AIM Collection:::
Here's what VAlue Line's latest statement on it is and this might help explain the rather dramatic recent drop:
PILGRIM'S PRIDE `B' (PPC; 26.45)*
Latest Report page 1501 11-4-05
Pilgrim's Pride, a producer of prepared and fresh chicken products, has lowered its share-earnings guidance for the December quarter to $0.36-$0.41, from a range of $0.75-$0.85. Management cited weaker-than-expected performance in Mexico and lower selling prices for chicken leg quarters in the U.S. We think the dramatic decline in prices is due to two reasons: Avian bird flu concerns and a market already at a cyclical peak.
We have been warning investors for several months that the market was peaking, particularly in Mexico. The Avian bird flu, however has garnered a significant amount of the media's attention. This likely took its toll on prices, resulting in weaker-than-anticipated profit margins. Accordingly, we are reducing our fiscal 2006 (ends September 30th) earnings estimate by hefty $1.15 a share, to $2.60. Investors should note that we believe chicken prices are likely to remain volatile over the next several quarters, which may cloud Pilgrim's near-term outlook. The company already has a low Earnings Predictability rating. Therefore, we believe that investors should look elsewhere for now. Shares of Pilgrim's Pride are down more than 20% today.
G.T.M.
* The earnings estimates presented herein supersede the figures found in the Summary & Index included in Issue 6 of The Value Line Investment Survey, dated 1-6-06.
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