Why Performance Food Group Shares Are Rising Today

Author: Nabaparna Bhattacharya | August 14, 2024 10:25am

Performance Food Group Company (NYSE:PFGC) shares are trading higher on Wednesday.

The company reported fourth quarter adjusted earnings per share of $1.45 (+27.2%), beating the analyst consensus estimate of $1.37.

Quarterly sales of $15.189 billion missed the street view of $15.266 billion. Net sales rose 2.2%, gross profit grew 4.7% to $1.7 billion, net income climbed 10.9% to $166.5 million, and adjusted EBITDA increased 18.4% to $456.2 million.

The gross profit increase was primarily attributable to a favorable shift in the mix of cases sold, including growth in the independent channel and Performance Brands.

“We are also pleased to announce two value creating deals with the proposed purchase of Cheney Brothers and the acquisition of José Santiago, which closed in July,” said George Holm, PFG’s Chairman & Chief Executive Officer. 

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The company has signed a definitive agreement to acquire Cheney Bros, a major independent broadline foodservice distributor based in Riviera Beach, Florida, and owned by the Cheney family and Clayton Dubilier & Rice, for $2.1 billion in cash.

This acquisition will enhance the company’s presence in the Southeast and expand its distribution capacity.

Cheney Brothers, which generates around $3.2 billion in annual revenue, will significantly bolster the company's operations.

In the quarter under review, total case volume increased 1.1% year over year for the fourth quarter. The increase in net sales was primarily attributable to case volume growth in independent Foodservice business, as well as recent acquisitions, partially offset by case declines in the Convenience and Vistar business. Overall product cost inflation for the company was approximately 4.7%.

In fiscal 2024, the company invested $395.6 million in capital expenditures, an increase of $125.9 million versus the prior year period.

Outlook: Performance Food Group forecasts first-quarter net sales between $15.2 billion and $15.5 billion, slightly below the $15.57 billion estimate, and expects 2025 net sales of $60 billion to $61 billion, compared to the $60.82 billion estimate.

Price Action: PFGC shares are trading higher by 9.24% to $73.28 at the last check Wednesday.

Photo via Midjourney

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Posted In: PFGC