Value
8.4/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 9.5 |
| P/S | 10.0 |
| EV/EBITDA | 9.0 |
| Fwd P/E | 9.5 |
| Analyst target | 6.0 |
- ▸Forward P/E: 8.2x
- ▸Attractively valued
PPC · Why this verdict
Why Pilgrim's Pride (PPC) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.0/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow is negative at negative 101% of net income, a red flag that reported earnings are not supported by cash generation, and quality has barely reached the minimum acceptable floor at 4.0 out of 10, meaning there is essentially no margin of safety on quality. Quality breakdown | Free cash flow turns positive and represents at least 50% of net income within the next 2 annual reporting periods. | →Stable |
| CounterProtein processors often run negative free cash flow during capital investment cycles for processing plant upgrades; the negative FCF ratio may reverse once capital spending normalizes. | ||
Pilgrim's Pride trades at a forward price-to-earnings of 7.7 times with the stock ranking attractively on valuation relative to packaged food peers, while delivering a 26% return on equity that outpaces most industry competitors. Valuation breakdown | The forward price-to-earnings ratio stays below 12 times as earnings expand and the stock price appreciates toward the analyst target of $34.15 within 12 months. | →Stable |
| CounterChicken processors historically trade at low multiples due to commodity exposure and thin margins; a low PE may reflect ongoing margin compression risk from feed costs and competitive pricing rather than true undervaluation. | ||
The company missed consensus EPS in 2 of the last 4 quarters with an average negative surprise of 3.36%, indicating inconsistent execution and making it difficult to underwrite a sustained earnings improvement trajectory. Earnings | EPS surprise averages above 5% over the next 4 reported quarters, signaling that the miss pattern has been corrected. | →Stable |
| CounterThe most recent quarter's miss is more than offset by strong beats in quarters 3 and 4 of the prior year; the miss pattern may be seasonal rather than structural. | ||
The put-to-call ratio is 3.53, indicating that three times as many put options as call options are outstanding, reflecting a strongly bearish near-term market view that creates a technical overhang on the stock. Key risks | The put-to-call ratio falls below 2.0 over the next 3 months as bearish positioning is reduced. | →Stable |
| CounterA high put-to-call ratio in a commodity-processing stock often reflects hedging by producers and distributors rather than directional bearish bets, which can overstate the true bearish sentiment. | ||
Free cash flow is negative at negative 101% of net income, a red flag that reported earnings are not supported by cash generation, and quality has barely reached the minimum acceptable floor at 4.0 out of 10, meaning there is essentially no margin of safety on quality.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive and represents at least 50% of net income within the next 2 annual reporting periods.
CounterProtein processors often run negative free cash flow during capital investment cycles for processing plant upgrades; the negative FCF ratio may reverse once capital spending normalizes.
Pilgrim's Pride trades at a forward price-to-earnings of 7.7 times with the stock ranking attractively on valuation relative to packaged food peers, while delivering a 26% return on equity that outpaces most industry competitors.
→StableValuation breakdown
- Expectation
- The forward price-to-earnings ratio stays below 12 times as earnings expand and the stock price appreciates toward the analyst target of $34.15 within 12 months.
CounterChicken processors historically trade at low multiples due to commodity exposure and thin margins; a low PE may reflect ongoing margin compression risk from feed costs and competitive pricing rather than true undervaluation.
The company missed consensus EPS in 2 of the last 4 quarters with an average negative surprise of 3.36%, indicating inconsistent execution and making it difficult to underwrite a sustained earnings improvement trajectory.
→StableEarnings
- Expectation
- EPS surprise averages above 5% over the next 4 reported quarters, signaling that the miss pattern has been corrected.
CounterThe most recent quarter's miss is more than offset by strong beats in quarters 3 and 4 of the prior year; the miss pattern may be seasonal rather than structural.
The put-to-call ratio is 3.53, indicating that three times as many put options as call options are outstanding, reflecting a strongly bearish near-term market view that creates a technical overhang on the stock.
→StableKey risks
- Expectation
- The put-to-call ratio falls below 2.0 over the next 3 months as bearish positioning is reduced.
CounterA high put-to-call ratio in a commodity-processing stock often reflects hedging by producers and distributors rather than directional bearish bets, which can overstate the true bearish sentiment.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Pilgrim's Pride trades at an attractive forward price-to-earnings of 7.7 times with a strong 26% return on equity and a favorable peer ranking on valuation, but the business quality just barely reaches the minimum threshold, free cash flow is deeply negative relative to net income, and a high put-to-call ratio of 3.53 reflects elevated bearish positioning.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 8.6 |
| ROA | 6.2 |
| Gross margin | 0.0 |
| Op margin | 1.7 |
| Net margin | 2.4 |
| Current ratio | 5.4 |
| FCF quality | 0.0 |
| Moat | 4.9 |
| Piotroski F | 4.4 |
- ▸Excellent ROE: 26%
- ▸Earnings quality RED FLAG: -101% FCF/NI
- ▸No competitive moat
Growth
1.4/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.9 |
| EPS growth | 0.0 |
Momentum
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 9.2 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 2.9 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -6.4%/30d — confirmed downtrend
Sentiment
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.0 |
| Analyst rating | 6.8 |
| Price target | 8.7 |
- ▸Light analyst coverage (8.0) — signal dampened
- ▸Analyst upside: 31%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.9 |
| quality rank | 7.6 |
| growth rank | 3.1 |
- ▸Attractive P/E vs peers
- ▸Superior ROE vs peers
Technical
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 4.9 |
| support resistance | 4.4 |
| 52w position | 1.9 |
Risk (lower is worse)
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.7 |
| days to cover | 6.4 |
| volatility | 3.3 |
| put call | 10.0 |
| implied vol | 0.0 |
| beta | 10.0 |
| debt equity | 5.6 |
| news risk | 6.0 |
- ▸High IV: 448%
Catalyst
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 0.8 |
| news activity | 5.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (7)
- MOMENTUM:6.1>=5.5
- ASYMMETRY:1.9>=1.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:24d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- DEATH_CROSS:momentum=6.1>=5.0 recovering
Reward-to-Risk
1.90
Upside
+14.3%
Downside
7.5%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 42
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -41% (>40% off 52w high)
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Value at 8.4 could not lift the engine output above the verdict floor.
The strongest dimensions are Value at 8.4, Sentiment at 6.5, and Risk (lower is worse) at 6.2; the weakest are Growth at 1.4, Technical at 3.7, and Quality at 3.7. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 1.90 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Attractive Value High Roe
Trip ifReturn on equity falls below 15% in any reported annual period over the next 12 months.
- P2Negative Fcf Quality Floor Risk
Trip ifFree cash flow remains below negative 50% of net income for 2 or more consecutive annual reporting periods.
- P3Mixed Earnings History
Trip ifEPS surprise falls below 0% in at least 3 of the next 4 reported quarters.
- P4Bearish Options Market Positioning
Trip ifThe put-to-call ratio rises above 5.0 at any point over the next 3 months.