We Like These Underlying Return On Capital Trends At Pilgrim's Pride (NASDAQ:PPC)

As investors, we're always on the lookout for companies that consistently generate high returns on capital employed (ROCE). Pilgrim's Pride (NASDAQ:PPC), a leading global poultry and prepared foods company, has been catching our eye with its impressive ROCE trends. Let's dive into the reasons behind these trends and what they mean for investors.



1. Consistent ROCE Growth: Over the past five years, Pilgrim's Pride has maintained a steady growth in its ROCE. From 2019 to 2023, the company's ROCE increased from 12.5% to 12.8%. This consistency in growth indicates that Pilgrim's Pride is effectively utilizing its capital to generate profits.
2. Expansion into New Markets: Pilgrim's Pride has been expanding its presence in new markets, such as Europe and Asia. This expansion has allowed the company to tap into new revenue streams and increase its overall capital efficiency. For instance, the acquisition of JBS's European operations in 2020 expanded Pilgrim's Pride's production capacity and increased its exposure to the European market.
3. Focus on Core Business: Pilgrim's Pride has been streamlining its operations and focusing on its core poultry business. The divestment of its prepared foods business in 2021 allowed the company to reduce its capital employed and improve its capital efficiency. This focus on the core business has contributed to the company's consistent ROCE growth.
4. Effective Capital Allocation: Pilgrim's Pride has been allocating its capital effectively, investing in high-return projects and divesting underperforming assets. This strategic approach to capital allocation has helped the company maintain a high ROCE and generate shareholder value.



In conclusion, Pilgrim's Pride's underlying ROCE trends are driven by the company's consistent growth, expansion into new markets, focus on core business, and effective capital allocation. As investors, we should keep an eye on these trends and consider adding Pilgrim's Pride to our portfolios. By doing so, we can benefit from the company's capital efficiency and potential for future growth.