3 Food Stocks To Consider Buying As The Restaurant Industry Evolves

Three prominent U.S. restaurant chains made big announcements over the last two days, helping the food industry jump to the front of many investors' minds.

Chipotle CMG announced its search for a new CEO on Wednesday, and news broke on Tuesday that Arby's Restaurant Group is set to acquire Buffalo Wild Wings BWLD.

Shares of Chipotle climbed after Steve Ells, the chairman, CEO, and founder of the company, announced that he intends to step down from his role as chief executive. Chipotle is now on the lookout for a new CEO to lead the struggling fast-casual burrito chain after a rough two-year stretch.

Similarly, the Arby's and Buffalo Wild Wings deal comes at a time when the chicken wing giant has slumped due to a multitude of factors (also read: Why Buffalo Wild Wings Stock Soared Today).

These two significant moves coincide with shifting U.S. eating habits that have left the restaurant industry somewhat in flux, leaving chains to fight among themselves to try to keep pace and standout. However, while individual chains and restaurants struggle, food wholesalers are still in demand.

With that said, let's take a look at three food industry stocks that present diversified exposure to the restaurant world at a time when picking individual restaurant stocks can prove challenging.

Performance Food Group Company PFGC

This food wholesale powerhouse, which delivers food to restaurants, vendors, and more, is the parent company of Vistar, PFG Customized, and Performance Foodservice. Performance Food Group is currently a Zacks Rank #2 (Buy) and boasts an overall "A" VGM score.

PFG also scored a "B" grade for Growth in our Style Scores system. The company's full-year sales are expected to surge over 7% to hit $17.95 billion, based on our current Zacks Consensus Estimates. On top of that, PFG's EPS is expected to jump 20.69% this quarter and 16.94% for the full year.

Along with its top and bottom line growth projections, PFG's current cash flow growth of 9.01% blows away the "Food – Natural Foods Products" industry's 1.17% average and helps demonstrate the company's growing cash position.

What's more, the food distributor is currently trading at 20.21x earnings, which marks a discount compared its industry's average and looks decent compared to the S&P 500's average. PFG's "B" Value grade is further supported by its 0.18 price to sales ratio, which also beats its industry's average.

Shares of PFG gained over 1.30% on Wednesday to hit a new 52-week high. This is part of a year-long run that has seen its stock price climb nearly 32%.

Pilgrim's Pride Corporation PPC

Shares of this chicken giant, which sells to grocery stores and delis, as well as local and national restaurant chains, popped on Wednesday to hit a new 52-week intraday trading high. Shares of Pilgrim's Pride have soared over 88.36% since the start of the year.

Earlier this month, Pilgrim's Pride posted third-quarter revenues of $2.79 billion, which marked a 12% year-over-year jump. On top of that, the company's EPS skyrocketed 138%.

For its upcoming fourth-quarter, Pilgrim's Pride sales are expected to jump nearly 33% to hit $2.57 billion, based on our current Zacks Consensus Estimates. For the full-year, the company's revenues are projected to hit $9.48 billion, which would mark a 19.55% gain from last year.

Also in Q4, Pilgrim's Pride earnings are expected to skyrocket 94.44%, while full-year EPS growth is projected to hit 62.71%.

What's more, Pilgrim's Pride boasts an "A" grade for Value in our Style Scores system. This is supported by the company's current 0.99 P/S ratio, which marks a discount compared to some of its competitors such as Hormel HRL and Sanderson Farms SAFM. Pilgrim's Pride is also currently trading at 12.56x earnings, which fairs well against the S&P 500 and marks a discount compared to its industry's average.

Pilgrim's Pride is currently a Zacks Rank #1 (Strong Buy) and sports an overall VGM Grade of an "A."

Farmer Bros. Co. FARM

This wholesale coffee company, which sells coffee to hotels, restaurants, and fast food chains, is a Zacks Rank #2 (Buy).

Based on our consensus estimates, Farmer Bros' earnings are projected to climb 50% next quarter, while its revenues are projected to gain 19.45% to hit $166.1 million. For the full-year, the company's earnings are expected to hit $0.72 per share, which would mark a 2.89% gain. On top of that, Farmer Bros' full-year sales are projected to surge 16.11% to reach as high as $628.7 million.

Furthermore, Farmer Bros scored a "B" for Value in our Style Scores system. The company's 1.05 P/S ratio is strong, while Farmer Bros current price to book ratio of 2.63 is very respectable.

Shares of Farmer Bros have gained 2.42% over the last 12-weeks and surged over 1.60% on Wednesday. Lastly, the coffee wholesaler has topped our Zacks Consensus Estimates for earnings in each of the last two quarters by a wide margin.

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Performance Food Group Company (PFGC): Free Stock Analysis Report
 
Farmer Brothers Company FARM: Free Stock Analysis Report
 
Pilgrim's Pride Corporation PPC: Free Stock Analysis Report
 
Chipotle Mexican Grill, Inc. CMG: Free Stock Analysis Report
 
Buffalo Wild Wings, Inc. BWLD: Free Stock Analysis Report
 
Hormel Foods Corporation HRL: Free Stock Analysis Report
 
Sanderson Farms, Inc. SAFM: Free Stock Analysis Report
 
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