For Immediate Release

Chicago, IL – Nov 22, 2017 – Zacks Equity Research highlights Pilgrim’s Pride PPC as the Bull of the Day and Discovery Communications DISCA as the Bear of the Day. In addition, Zacks Equity Research provides analysis on the Salesforce.com CRM, Hewlett Packard Enterprise HPE and HP Inc. HPQ.

Here is a synopsis of all five stocks:

Bull of the Day:

If Pilgrim’s Pride is known for anything, it’s chicken. In fact, one out of every five chickens in the U.S. comes from Pilgrim’s, which counts itself as the second-largest chicken producer in world; the company has the capacity to process over 34 million birds per week, totaling more than 10 billion pounds of live chicken annually.

Headquartered in Greeley, Colorado, Pilgrim’s Pride is a Zacks Rank #1 (Strong Buy), and earnings are expected to grow almost 63% in fiscal 2017. Its recent $1 billion purchase of Moy Park, which supplies 25% of chicken consumed in western Europe, should be “immediately accretive to earnings per share.”

Impressive Third Quarter Earnings

A few weeks ago, Pilgrim’s reported better-than-expected third quarter results.

Earnings of 93 cents per share comfortably surpassed the Zacks Consensus Estimate of 77 cents per share. Net income was $232.7 million.

Revenues came in at $2.79 billion, also beating our consensus estimate and growing year-over-year. Pilgrim’s revenues from its three main regional operations improved greatly during the quarter; U.S., Mexican, and European revenues increased 12.4%, 11%, and 11%, respectively.

Operating income for the quarter was $372 million, while adjusted operating income margin for the U.S. was 16.6%. Gross margin expanded 700 basis pointed (bps) year-over-year to 17.1%.

Bullish Outlook

Overall, the U.S. Department of Agriculture expects the chicken industry to record growth next year, with demand for organic and antibiotic-free chicken products to increase.

Pilgrim’s Pride only stands to benefit from this outlook.

Going forward, the company’s Moy Park acquisition will likely help fortify its European business.

And, the successful integration of GNP Company, which they bought in January, is projected to boost PPC’s near-term profitability.

GNP is another popular name in the chicken industry, and Pilgrim’s currently projects annualized synergies of $40 million as a result of the acquisition.

Strong Growth Estimates

Not only does Pilgrim’s expect double digit earnings growth for this fiscal year, but revenues are anticipated to increase 19.5% in the same time frame.

For the current quarter, earnings and sales are projected to rise about 94% and 35%, respectively, with one analyst revising their estimate upwards in the last seven days.

Earnings estimates for 2018 are also on the rise, jumping to $2.99 per share from $2.85 per share in the last 30 days.

Will the Rally Continue?

2017 was a big year for shares of Pilgrim’s Pride. The stock has gained around 87% so far this year compared to the S&P 500’s return of 14.4%.

If the chicken market continues to be as fruitful as it has been, PPC could gain even more.

Bear of the Day:

Discovery Communications is a media company that boasts a portfolio with some of the most popular names in cable television: Discovery Channel, TLC, and Animal Planet, as well as OWN: Oprah Winfrey Network, Science Channel, and many more Discovery branded channels.

Its 13 U.S. cable and satellite TV networks reach between 47 and 85 million households each.

No matter how popular Shark Week is, the Zacks Rank #5 (Strong Sell) stock has certainly felt the negative effects of cord-cutting and its continued changes to the television landscape.

Mixed Third Quarter Results

At the beginning of the month, Discovery reported earnings of 43 cents per share (excluding 5 cents from non-recurring items), which fell considerably behind the Zacks Consensus Estimate of 55 cents.

Revenues, though, grew 6% year-over-year to $1.65 billion and outpaced our consensus estimate of $1.638 billion.

In its U.S. Networks division, Discovery said that revenues increased 4% to $823 million, noting that segmental growth was driven by 6% and 3% growth in distribution and advertising revenues, respectively.

But, revenues from the Education and Other division fell 26% to $32 million, primarily due to the impact of the sale of its Raw and Betty production studios.

Total subscribers declined 5% in the U.S., an increase from the second quarter and up 2% in the period a year ago.

Additional content:

Salesforce, Hewlett Packard Slip Post-Earnings

Salesforce.com topped expectations in its fiscal Q3 2018 earnings report, bringing in 39 cents per share -- a 2-cent beat, but also 66% growth year over year) -- on $2.68 billion in revenues that came in slightly ahead of expectations. Guidance for fiscal year 2018 was bumped up to $1.32-1.33; the Zacks consensus had it at $1.31 ahead of the report. Shares are selling off 1% on the news, though CRM stock had been up 59% year to date. For more info on CRM's earnings, click here.

Hewlett Packard Enterprise beat fiscal Q4 2017 estimates on both top and bottom lines, posting 30 cents per share on revenues of $8.2 billion in the quarter, outperforming the 28 cents and $7.71 billion, respectively, in the Zacks consensus estimates. The company, which split in half from Hewlett-Packard Inc. 2 years ago, kept guidance for Q1 and full-year 2018 within range of Zacks estimates. This marks the second-consecutive beat for HPE, but shares have nevertheless sold off more than 7% in late trading. For more info on HPE's earnings, click here.

Its split partner, HP Inc., also reported fiscal Q4 earnings, meeting the 44 cents per share expected on $13.9 billion, which surpassed the Zacks consensus $13.3 billion. Guidance for Q1 2018 is for 38-42 cents per share; the Zacks estimate is already at 42 cents. Full-year 2018, the company guided to $1.70-1.80 per share; our estimate is $1.78. Shares are down more than 5% in late trading on the news. While HPQ had been up more than 51% year to date, HPE has sold off 39%.

Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

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