Investment Thesis for Pilgrim’s Pride, Corp. (NYSE:PPC)
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Date
2016-07
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Publisher
Institute for Applied Economics, Global Health, and the Study of Business Enterprise
Abstract
This working paper is an in-depth analysis of Pilgrim’s Pride, Corp. (PPC). Our analysis examines the chicken cycle, commodity prices, and the economic factors that impact Pilgrim’s Pride’s underlying business. We combine our economic analysis with our proprietary, Hanke-Guttridge Discounted Cash Flow (HG-DCF) model to assess PPC’s financial position. Instead of obtaining a single and static valuation of PPC, Monte-Carlo simulations are used alongside our HG-DCF model to reveal the distribution of probable free cash flows and future earnings. Management compensation is also analyzed in depth to evaluate whether or not management is incentivized to act in the best interest of the shareholders. Our goal is to foster reasonable investment decisions by allowing readers to understand Pilgrim’s Pride’s business plan and financial health.
Description
The Studies in Applied Finance series is under the general direction of Prof. Steve H. Hanke, Co-Director of the Johns Hopkins Institute for Applied Economics, Global Health, and Study of Business Enterprise (hanke@jhu.edu) and Dr. Hesam Motlagh (hesamnmotlagh@gmail.com), a Fellow at the Johns Hopkins Institute for Applied Economics, Global Health, and Study of Business Enterprise.
This working paper is one in a series on applied financial economics, which focuses on company valuations. The authors are mainly students at the Johns Hopkins University in Baltimore who have conducted their work at the Institute as undergraduate researchers.
Keywords
finance, investment thesis, Pilgrim's Pride, financial modeling, discounted cash flow, free cash flow, Monte-Carlo simulation, management compensation