Critical Review: Pilgrim’s Pride Corporation (PPC) versus Sanderson Farms (NASDAQ:SAFM)
Pilgrim’s Pride Corporation (NASDAQ: PPC) and Sanderson Farms (NASDAQ:SAFM) are both mid-cap consumer staples companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitabiliy, earnings, institutional ownership, valuation and dividends.
Risk and Volatility
Pilgrim’s Pride Corporation has a beta of 0.16, meaning that its share price is 84% less volatile than the S&P 500. Comparatively, Sanderson Farms has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.
This is a breakdown of recent ratings and target prices for Pilgrim’s Pride Corporation and Sanderson Farms, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Pilgrim’s Pride Corporation||0||2||3||0||2.60|
Pilgrim’s Pride Corporation currently has a consensus price target of $23.33, suggesting a potential upside of 3.75%. Sanderson Farms has a consensus price target of $117.13, suggesting a potential downside of 2.16%. Given Pilgrim’s Pride Corporation’s stronger consensus rating and higher probable upside, research analysts plainly believe Pilgrim’s Pride Corporation is more favorable than Sanderson Farms.
Sanderson Farms pays an annual dividend of $0.96 per share and has a dividend yield of 0.8%. Pilgrim’s Pride Corporation does not pay a dividend. Sanderson Farms pays out 9.9% of its earnings in the form of a dividend.
Insider & Institutional Ownership
26.6% of Pilgrim’s Pride Corporation shares are owned by institutional investors. 78.8% of Pilgrim’s Pride Corporation shares are owned by company insiders. Comparatively, 5.7% of Sanderson Farms shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Valuation & Earnings
This table compares Pilgrim’s Pride Corporation and Sanderson Farms’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Pilgrim’s Pride Corporation||$7.99 billion||0.70||$862.84 million||$1.65||13.63|
|Sanderson Farms||$3.01 billion||0.90||$430.18 million||$9.74||12.29|
Pilgrim’s Pride Corporation has higher revenue and earnings than Sanderson Farms. Sanderson Farms is trading at a lower price-to-earnings ratio than Pilgrim’s Pride Corporation, indicating that it is currently the more affordable of the two stocks.
This table compares Pilgrim’s Pride Corporation and Sanderson Farms’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Pilgrim’s Pride Corporation||5.21%||46.08%||13.31%|
Pilgrim’s Pride Corporation beats Sanderson Farms on 9 of the 16 factors compared between the two stocks.
Pilgrim’s Pride Corporation Company Profile
Pilgrim’s Pride Corporation is a retail feed store. It is a producer and seller of chicken with operations in the United States, Mexico and Puerto Rico. It is engaged in the production, processing, marketing and distribution of fresh, frozen and value-added chicken products to retailers, distributors and foodservice operators. It offers a range of products to its customers through national and international distribution channels. Its fresh chicken products consist of refrigerated (non-frozen) whole chickens, whole cut-up chickens and selected chicken parts that are either marinated or non-marinated. Its prepared chicken products include ready-to-cook and individually frozen chicken parts, strips, nuggets and patties, some of which are either breaded or non-breaded and either marinated or non-marinated. As of December 25, 2016, the Company marketed its portfolio of fresh, prepared and value-added chicken products across the United States, Mexico and in approximately 80 other countries.
Sanderson Farms Company Profile
Sanderson Farms, Inc. is a poultry processing company. The Company is engaged in the production, processing, marketing and distribution of fresh and frozen chicken, and also preparation, processing, marketing and distribution of processed and minimally prepared chicken. It sells ice pack, chill pack, bulk pack and frozen chicken, in whole, cut-up and boneless form, under the Sanderson Farms brand name to retailers, distributors, casual dining operators, customers reselling frozen chicken into export markets. The Company, through its subsidiaries, Sanderson Farms, Inc. (Production Division) and Sanderson Farms, Inc. (Processing Division), conducts its chicken operations. Sanderson Farms, Inc. (Production Division) is engaged in the production of chickens to the broiler-stage. Sanderson Farms, Inc. (Foods Division) is engaged in the processing, sale and distribution of chickens. The Company, through Sanderson Farms, Inc. (Foods Division), conducts its prepared chicken business.
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