Chicken producer Pilgrim’s Pride (NASDAQ: PPC) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 3.3% year on year to $4.52 billion. Its non-GAAP profit of $0.68 per share was 9.9% below analysts’ consensus estimates.

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StockStory’s Take

Pilgrim’s Pride’s fourth quarter results were met with a negative market reaction, as rising sales were offset by margin compression and adjusted earnings below analyst expectations. Management cited robust demand in the U.S. retail and foodservice channels, particularly for value-added and branded products such as Just BARE, but also acknowledged operational headwinds. CEO Fabio Sandri pointed to persistent inflation and commodity market pressure, especially in Mexico and certain European segments, as factors behind the quarter’s underwhelming profit performance. Sandri noted that “chicken’s affordability was exceptionally appealing across channels and categories,” but cautioned that volatility in input costs and supply dynamics weighed on profitability.

Looking ahead, Pilgrim’s Pride’s forward guidance centers on investments in production capacity and brand expansion to drive growth, especially in prepared foods and new Mexican regions. Management expects continued strong demand for chicken as an affordable protein, with Sandri emphasizing that “our growth plans will further mitigate the volatility of our portfolio resulting in a higher, more resilient earnings profile.” However, the company flagged ongoing risks from commodity price swings, shifting consumer habits, and external market disruptions. CFO Matthew Galvanoni added that capital spending will rise in 2026 to support these strategic initiatives, with a focus on operational excellence and margin stabilization.

Key Insights from Management’s Remarks

Management attributed Q4’s performance to strong U.S. branded sales, operational improvements, but margin headwinds in Mexico and commodity-driven volatility.

• U.S. branded growth: The Just BARE brand accelerated share gains in both fresh and prepared categories, with management highlighting “the highest velocity of any brand within frozen chicken” and increased distribution driving sales momentum.
• Operational efficiency efforts: Initiatives in Big Bird and live operations improved plant productivity, helping offset some negative effects from commodity price swings, though not enough to prevent margin declines.
• Mexico volatility: The segment saw profitability pressured by a surge in imported animal-based protein and favorable growing conditions increasing supply, which led to weaker pricing and earnings in the quarter.
• European performance mixed: Efficiency projects and product mix optimization supported profitability in poultry, but the Richmond pork brand faced challenges from increased supply due to animal disease-driven export restrictions in Spain.
• Foodservice channel shifts: While full-service restaurant traffic declined, growth in quick-service restaurants (QSRs) and non-commercial channels, such as schools, compensated for softness elsewhere, with chicken’s affordability driving menu penetration.

Drivers of Future Performance

Management’s outlook for 2026 is shaped by continued investment in capacity, portfolio diversification, and external market risks.

• Expansion of prepared foods: Pilgrim’s Pride plans to double fully cooked capacity in Mexico and continue building a new facility in Georgia, aiming to capture demand for branded, value-added chicken products and reduce earnings volatility.
• Geographic and portfolio diversification: The company is expanding its presence in underpenetrated Mexican regions and converting a U.S. commodity plant to a case-ready operation, intending to better match evolving consumer demand and insulate margins from regional shocks.
• Margin headwinds and input costs: Management cited ongoing risks from commodity price volatility (corn, soy, wheat) and shifting protein market dynamics, noting that higher capital spending in 2026 will be required to support strategic projects, while profitability could remain pressured if input costs or competitive pressures persist.

Catalysts in Upcoming Quarters

Going forward, the StockStory team will be monitoring (1) execution of capacity expansion projects—especially the ramp-up in Georgia and Mexico, (2) resilience of branded and value-added product sales, particularly Just BARE’s distribution and innovation, and (3) management’s ability to stabilize margins amid commodity price swings and supply chain shifts. Additional attention will be paid to Mexico’s recovery and European segment performance as signposts for broader earnings stability.

Pilgrim's Pride currently trades at $41.52, down from $43.19 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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