USFD - Performance Food Group Company: A Downgrade After A Tasty Run Higher

2024-05-05 00:25:31 ET

Summary

• Performance Food Group Company has seen marginal outperformance in the stock market since last year, but it is now more expensive and not as cheap compared to similar firms.
• The company has shown solid growth in revenue and profits, with a 2.9% increase in revenue for the second quarter of the 2024 fiscal year.
• Management has provided positive guidance for future revenue and EBITDA growth, but shares are currently closer to fair value and warrant a downgrade to a 'hold' rating.

Back in late October of last year, I found myself looking into Performance Food Group Company ( PFGC ), an enterprise that focuses largely on food distribution. The firm services over 300,000 customer locations from no fewer than 142 distribution centers. This makes it a behemoth in the space, which is also evidenced by the fact that, in 2023 alone, the business generated $57.25 billion in revenue. Back when I wrote about the enterprise, I found myself feeling rather bullish about it. Leading up to that point, shares had been pulling back, even as revenue and profits rose nicely. What's more, management had some high expectations for the next couple of years. When you add on top of this how shares were priced, I could not help but to give it a ‘buy’ rating....

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