Group 1: BRF S.A. (BRFS) - BRF S.A. is a meat processing company with a Zacks Rank 1 and has seen a 62.1% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - The company has a price-to-earnings ratio (P/E) of 9.30, significantly lower than the industry average of 25.20 [1] - BRF S.A. possesses a Value Score of A, indicating strong value characteristics [1] Group 2: CF Industries Holdings, Inc. (CF) - CF Industries Holdings, Inc. is a provider of hydrogen and nitrogen solutions, also holding a Zacks Rank 1, with a 21.2% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - The company has a P/E ratio of 14.72, compared to the industry average of 20.70 [2] - CF Industries Holdings has a Value Score of A, reflecting its strong value characteristics [2] Group 3: Fluor Corporation (FLR) - Fluor Corporation is engaged in engineering, procurement, construction, and project management services, holding a Zacks Rank 1, with a 0.9% increase in the Zacks Consensus Estimate for its next year earnings over the last 60 days [3] - The company has a P/E ratio of 16.55, which is lower than the industry average of 29.80 [3] - Fluor Corporation possesses a Value Score of B, indicating solid value characteristics [3]

Group 1 - The recommendation is to buy shares of BRF S.A. (NYSE: BRFS) after the release of the company's results at the end of the 2nd quarter [1] - The analysis is based on over 5 years of experience in equity analysis in Latin America, providing in-depth research and insights for informed investment decisions [1]

BRF (BRFS) closed at $4.48 in the latest trading session, marking a -1.32% move from the prior day. The stock's performance was behind the S&P 500's daily loss of 0.13%. Elsewhere, the Dow gained 0.33%, while the tech-heavy Nasdaq lost 0.39%. The chicken, beef and pork producer's shares have seen a decrease of 1.09% over the last month, not keeping up with the Consumer Staples sector's gain of 2.28% and the S&P 500's gain of 2.43%. Analysts and investors alike will be keeping a close eye on the performance ...

Core Insights - Investors are evaluating BRF (BRFS) and Lamb Weston (LW) for potential value opportunities in the Food - Miscellaneous sector [1] Valuation Metrics - BRFS has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while LW has a Zacks Rank of 5 (Strong Sell) [3] - The forward P/E ratio for BRFS is 9.66, significantly lower than LW's forward P/E of 14.27 [5] - BRFS has a PEG ratio of 0.26, suggesting better value relative to its expected EPS growth, compared to LW's PEG ratio of 6.18 [5] - The P/B ratio for BRFS is 1.53, while LW's P/B ratio is 5.24, indicating that BRFS is more undervalued based on market value versus book value [6] - Based on these metrics, BRFS holds a Value grade of A, whereas LW has a Value grade of C [6] Earnings Outlook - BRFS is currently experiencing an improving earnings outlook, making it a more attractive option for value investors [7]

Company Performance - BRF's stock closed at $4.60, reflecting a +1.1% change from the previous trading day's closing, outperforming the S&P 500's gain of 0.03% [1] - Over the past month, BRF shares have decreased by 2.57%, underperforming the Consumer Staples sector's gain of 4.12% and the S&P 500's gain of 1.54% [1] Earnings Forecast - The upcoming earnings release is expected to show an EPS of $0.12, representing a 340% increase from the same quarter last year [2] - Revenue is forecasted to be $2.84 billion, indicating a 0.28% increase compared to the same quarter of the previous year [2] Full Year Estimates - For the full year, earnings are projected at $0.43 per share and revenue at $10.85 billion, reflecting increases of +243.33% and +12.13% respectively from the previous year [3] - Recent revisions to analyst forecasts are crucial as they indicate confidence in the company's performance and profit potential [3] Valuation Metrics - BRF has a Forward P/E ratio of 10.58, which is a discount compared to the industry average Forward P/E of 18.34 [5] - The current PEG ratio for BRF is 0.28, significantly lower than the Food - Miscellaneous industry's average PEG ratio of 2.79 [6] Industry Ranking - The Food - Miscellaneous industry is part of the Consumer Staples sector and has a Zacks Industry Rank of 88, placing it in the top 35% of over 250 industries [6] - The Zacks Rank system indicates that BRF currently holds a Zacks Rank of 2 (Buy), with a 21.13% rise in the Zacks Consensus EPS estimate over the past month [5]

Core Viewpoint - BRF has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling pressure that affects stock prices [4]. Company Performance and Outlook - For the fiscal year ending December 2024, BRF is expected to earn $0.43 per share, reflecting a 243.3% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for BRF has risen by 48.3%, indicating a positive trend in earnings expectations [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% receiving a 'Strong Buy' or 'Buy' rating [9][10]. - The upgrade of BRF to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Investors interested in Food - Miscellaneous stocks are likely familiar with BRF (BRFS) and Lamb Weston (LW) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out. We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to ...

Core Viewpoint - BRF S.A. has shown significant margin recovery in 2Q24, driven by favorable poultry and pork markets, declining grain prices, and the depreciation of the Brazilian real (BRL) [1][3][4] Financial Performance - BRF's EBITDA margins improved by nearly ten percentage points year-over-year, contributing to a substantial increase in operating income [3] - The company reported revenues of approximately $11 billion year-to-date, with EBITDA margins at 17.5%, leading to an annualized EBITDA close to $2 billion [7] - The net income after taxes is estimated at $940 million, resulting in a price-to-earnings (P/E) ratio of 8x, which is considered low but may not sufficiently cover the expected return [7] Market Dynamics - Grain prices, a key factor in BRF's profitability, have fallen to levels comparable to the 2015-2020 bear market, with expectations of remaining low due to anticipated higher harvests [4] - Global poultry and swine prices have been rising due to supply shortages following a poor 2022/23 cycle, although adjustments in production capacity take time [4] - Strong domestic demand in Brazil, where BRF generates about 40% of its EBITDA, is supported by low unemployment and rising salaries [4] Operational Developments - BRF has gained 57 new exporting licenses year-to-date and expects an additional 40 by the end of FY24, enhancing its market flexibility [5] - The company has achieved approximately BRL 800 million in operating savings from its BRF 2.0 program, although the sources of these savings remain unclear [6] Future Outlook - The current positive cycle may not sustain, as margins are likely to decrease due to rising grain prices and potential oversupply in the poultry and pork markets [2][8] - Long-term average EBITDA margins for BRF are projected at 10.2%, significantly lower than the current margins, indicating potential overvaluation at a market cap of $7.7 billion [7][8]

Financial Data and Key Metrics Changes - The company reported a significant revenue growth of 22.3% compared to the same period in 2023, achieving an EBITDA of R$2.6 billion with a margin of 17.6% [3][5] - Net income reached almost R$15 billion, a 22% increase year-over-year, with free cash flow performance at R$1.7 billion [5][12] - The gross profit was approximately R$3.9 billion, with a profitability margin of 26.4% [5] Business Line Data and Key Metrics Changes - In Brazil, the EBITDA margin reached 15.7%, with significant growth in processed food categories, particularly in sales volumes [6][14] - The international market saw an improvement in EBITDA margin by 4 percentage points compared to the previous period, driven by recovery in export prices and market diversification [7][14] - The Ingredients and Pet segment reported an EBITDA margin of 11.9%, with a focus on expanding markets and increasing sales of value-added items [8] Market Data and Key Metrics Changes - The domestic market showed strong volume growth, particularly in processed products, despite a recovering consumption environment [6][14] - The international market demonstrated a strong performance, especially in Turkey and GCC, with gains in chicken and pork exports [7][14] - The halal market saw a market share gain of 1.2 percentage points compared to the previous quarter [7] Company Strategy and Development Direction - The company continues to focus on its efficiency journey guided by BRF+ 2.0, which has shown improvements in operating indicators and competitiveness [4][14] - The management model emphasizes capturing opportunities and maintaining a high-performance culture [4][15] - The company is expanding its presence in new markets, having won 57 new licenses in the first half of the year, including access to the UK and Southeast Asia [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the market, with balanced supply and demand across all locations, including Brazil [19][22] - The future perspectives are positive, with expectations of growth in soybean and corn production, which will support cost competitiveness [22] - The company is prepared to manage challenges, including the recent Newcastle disease, with a strong operational efficiency program in place [34][37] Other Important Information - The company achieved 90% traceability of indirect suppliers in critical biomes and aims for 50% of electricity from clean sources by 2030 [10] - The net debt was reported at R$8.9 billion, with the lowest leverage in nine years, contributing to reduced interest charges [12][11] Q&A Session All Questions and Answers Question: Insights on the international market and future expectations - Management highlighted a stable market with balanced supply and demand, and the importance of new permits in maintaining this balance [19][20] - The company is working on 40 new permits by the end of the year, adding to the 57 new destinations enabled for 2024 [26] Question: Factors affecting supply and market dynamics - Management noted that the current market conditions are stable, with no significant pressure on supply affecting prices [20][28] Question: Cost expectations and inventory levels - The company anticipates marginal room for a fall in feed prices, with ongoing efficiency programs supporting cost reductions [46][47] Question: Impact of Newcastle disease on operations - Management confirmed that markets have reopened, and the company has implemented plans to manage inventory and redirect products effectively [34][36] Question: Volume growth in Brazil and sustainability - The company attributed strong volume growth to improved commercial execution and market demand, with expectations for continued growth in the second half of the year [40][41] Question: Capital allocation and investment strategies - Management indicated a focus on organic growth and maintaining profitability, with potential for increased dividends and share repurchase programs [48][49] Question: Pricing dynamics in the international market - The company emphasized the importance of a robust pricing system and the ability to capitalize on market opportunities through strategic decision-making [50][51]

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