PFGC

Performance Food Group Company

Consumer


Presented:08/11/2021
Price:$46.27
Cap:$6.19B
Current Price:$82.71
Cap:$12.89B

Presented

Date08/11/2021
Price$46.27
Market Cap$6.19B
Ent Value$10.40B
P/E RatioN/A
Book Value$15.55
Div Yield0%
Shares O/S133.81M
Ave Daily Vol1,568,162
Short Int5.47%

Current

Price$82.71
Market Cap$12.89B
Performance Food Group Co. engages in the market and distribution of food products. It operates through the following segments: Foodservice and Vistar. The Foodservices segment delivers food and food-related products to independent restaurants, chain restaurants, and other institutional food-away-from-home locations. The Vistar segment offers candy, snack, and beverage to customers in the vending, office coffee services, theater, retail, and other channels. The company was founded in 1885 and is headquartered in Richmond, VA.

Publicly traded companies mentioned herein: Casey’s General Stores Inc (CASY), Core-Mark Holding Co Inc (CORE), Performance Food Group Co (PFGC), Sysco Corp (SYY), US Foods Holding Corp (USFD)

Highlights

The presenter is long shares of Performance Food Group (PFGC), believing that its acquisition of Core-Mark Holding Co (CORE) has been misunderstood, the company can effectively navigate cost inflation, and demand for food away from home post-COVID will remain intact long-term. Due to these potential issues, PFGC’s stock has traded down ~25% from its 52-week high of $60 per share in March 2021, and he views the current $46 share price as an attractive entry point. Overall, he believes that Core-Mark is a strong asset with a good organic growth profile that’s enhanced by combining with PFGC’s distribution network, and allows PFGC to tap into the relationships with Core-Mark’s suppliers. At the same time, cost pressures (e.g., labor, freight, food, etc.) will prove to be transitory, and ultimately demand from independent restaurants and other customers will not be structurally affected. Therefore, he believes the stock is mispriced at 14x 2024 Street EPS estimates of $3.27, and layering in earnings growth and synergies from the Core-Mark acquisition he thinks the stock should trade back up to 22.5x his normalized 2024 EPS estimate of $4.15. Discounting this back at 9% he arrives at a price target of $70 - $75 per share, layering in $40M of synergies and assuming no benefit of any capital allocation. 

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