Yahoo Finance Pilgrim's Pride (NASDAQ:PPC) stock performs better than its underlying earnings growth over last year
Passive investing in index funds can generate returns that roughly match the overall market. But you can significantly boost your returns by picking above-average stocks. For example, the Pilgrim's Pride Corporation (NASDAQ:PPC) share price is up 79% in the last 1 year, clearly besting the market return of around 21% (not including dividends). That's a solid performance by our standards! Looking back further, the stock price is 76% higher than it was three years ago.
Since the stock has added US$391m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.
See our latest analysis for Pilgrim's Pride
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During the last year Pilgrim's Pride grew its earnings per share (EPS) by 8.6%. This EPS growth is significantly lower than the 79% increase in the share price. This indicates that the market is now more optimistic about the stock.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. It might be well worthwhile taking a look at our free report on Pilgrim's Pride's earnings, revenue and cash flow.
A Different Perspective
It's good to see that Pilgrim's Pride has rewarded shareholders with a total shareholder return of 79% in the last twelve months. That's better than the annualised return of 8% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Pilgrim's Pride is showing 1 warning sign in our investment analysis , you should know about...
If you are like me, then you will not want to miss this free list of undervalued small caps that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
