A freezer with JBS meat products by Carol Maluf via Shutterstock
The initial public offerings (IPO) keep on coming in 2025. From trading platform eToro (TORO) to stablecoin issuer Circle (CRCL) and health tech platform Omada (OMDA), it seems that investors are being spoilt for choice after a lull in the IPO market.
The latest noteworthy company to come public is the world’s largest meatpacking company, JBS (JBS). Let’s “unpack” and find out whether the company’s stock is tender enough for an investment.
Founded way back in 1953 by José Batista Sobrinho, hence the name, JBS has become a global meat-processing behemoth. It processes beef, chicken, pork, lamb, and fish — along with byproducts including leather, collagen, biodiesel, and cleaning products. With 600 production units worldwide, JBS has the ability to process 75,000 cattle, 14 million chickens, and 147,000 pigs per day.
The meatpacking giant began trading on the New York Stock Exchange on Friday, June 13, and its shares are now dually listed in the U.S. and Brazil. Some see the listing of JBS in the United States itself as a victory. JBS’s holding company plead guilty to bribery charges in the U.S. in 2020, and U.S. environmentalists and lawmakers have taken issue with its environmental footprint, including its reportedly steep emissions.
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In Q1 2025, JBS’s net revenues increased by 8.5% from the previous year to $19.5 billion. The company’s home country of Brazil witnessed a yearly rise of 10.3% in revenues to $3.2 billion. This also resulted in an improvement in operating profit margins to 7.8% from 7.2% in the year-ago period.
Earnings also jumped to $0.23 per share from $0.15 per share as the company’s operating profits rose to $1.5 billion in Q1 2025 from $1.3 billion in the corresponding period a year ago.
Although net debt decreased to $14.8 billion (vs. $15.9 billion in Q1 2024), JBS’s cash flow-generating abilities remained a cause for concern. Net cash outflow from operating activities widened to $555 million from $235 million in the prior year as the company closed the quarter with a cash balance of $4.8 billion, much lower than its net debt levels.
JBS has established itself as a major force in the global meat industry, especially in the United States where it stands as the largest producer of beef and the second-largest in both poultry and pork. Also, its international reach is extensive, with operations in 20 countries and product distribution spanning over 190 markets. The company’s diverse product range includes beef, pork, poultry, and other meat categories, making its portfolio both broad and resilient.
Consequently, this international scale provides JBS with a competitive edge in multiple ways. In several regions where it operates, the company occupies a dominant buyer position as this concentrated buying power allows JBS to exert significant control over its suppliers, including livestock farmers and poultry producers who may lack alternative customers. As a result, JBS often sets favorable terms, including pricing and payment schedules.
Importantly, JBS’s global supply network acts as a buffer against regional disruptions. While commodity cycles in meat production can vary significantly by geography, the company’s ability to shift sourcing and sales across markets enables it to manage risks more effectively. For instance, when local oversupply pushes prices down in one region, JBS can capitalize on those lower costs while selling in higher-priced areas, enhancing its profitability.
The company is also investing heavily to expand and diversify its operations. Recent projects include an investment in salmon farming infrastructure in Australia and a sizeable expansion in processed poultry production at its Jeddah facility in Saudi Arabia.
However, challenges persist, especially regarding input cost volatility. Raw materials like corn (ZCN25), soybeans (ZSN25), and livestock are central to JBS’s operations, and price spikes in these commodities can put pressure on profit margins.
Critically, governance issues also remain a source of concern for investors. The return of Joesley and Wesley Batista, sons of founder José Batista Sobrinho, to the board has reignited controversy. Both were involved in a major corruption scandal in Brazil in 2017, which resulted in prison time and a $3.2 billion settlement paid by their holding company, J&F Investimentos. Their reappointment has prompted skepticism among shareholders, despite the company’s strong operating performance.
Undoubtedly, JBS has some concerns around its balance sheet. However, the company has demonstrated abilities to generate enough revenue and cash flow to tackle these problems. Further, its dominant position in the meat processing market will always give it an edge.
However, the company must demonstrate that it can maintain and earn more trust from shareholders by visibly addressing governance and ESG concerns. The company should consistently engage in dialogue with environmental groups to alleviate their concerns that the company may be profiting by degrading the environment.
On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
