Performance Food Group Sees Disinflation Tailwinds in 2025
2024.08.20 17:22
Deflation occurs when general prices actually fall. This can result in a negative inflation rate, which can be harmful to the economy. Deflation occurs during severe economic downturns.
Performance Food Group operates in the retail/wholesale sector, competing with food distributors such as Sysco Co. (NYSE: NYSE:), United Natural Foods Inc. (NYSE: NYSE:), and SpartanNash Co. (NASDAQ:).
Performance Food’s Exclusive Portfolio of Brands
The company has exclusive brands under its Performance Foodservice segment, with categories like Center of Plate (COP) and Seafood. These brands offer beef, poultry, and seafood to high-end luxury steakhouses, fast-food burger joints, and on-the-go food trucks. Its exclusive seafood brands include top-tier Bay Winds, Empire’s Treasure, The Fresh Catch, and World Dock.
Its Bakery & Desserts category carries exclusive products from Heritage Ovens, Sweet Encore, Piancone and Roma gelato, tiramisu, cannoli, and coffee and expresso from Italy. Performance sells thousands of products covering condiments to freshly caught fish from over 100 exclusive brands, including custom-cut meats. Its customers range from restaurants to convenience stores, hotels, schools, universities, retail, senior living, and healthcare facilities.
PFGC Stock Is Back in an Ascending Parallel Price Channel
The daily candlestick chart for PFGC shows an ascending price channel pattern. The ascending upper trendline connects the higher highs, and the lower trendline connects the higher lows. While PFGC fell out of the channel before its earnings report, the price gap from $67.34 to $70.73 placed shares firmly back into the channel. The daily relative strength index (RSI) rose to the 70-band. Pullback support levels are at $70.73, $67.34 gap fill, $65.19, and $63.35.
The Turnaround Is Accelerating
Performance Food Group reported fiscal Q4 2024 EPS of $1.45, beating consensus estimates of $1.37 by 8 cents. Adjusted EBITDA rose 18.4% to $456.2 million. Revenues rose 2.3% YoY to $15.2 billion versus $15.25 billion. Total case volume grew 1.1% YoY. Organic independent food service case volume rose by 3.7%. Net income rose 10.9% YoY to $166.5 million. Overall, product cost inflation for its food service business rose 2.9% in the quarter. Its Foodservice segment sales rose 4.6% to $7.7 billion. The Vistar segment had a 1.8% drop in net sales to $1.2 billion. The Convenience segment’s net sales dropped by 0.5% YoY to $6.3 billion.
Performance Food Group Issues Mixed Guidance
For fiscal Q1 2025, Performance Food Group issued downside revenue guidance of $15.2 billion to $15.5 billion versus the $15.54 billion consensus. Adjusted EBITDA is expected to be around $400 million to $425 million. Business results for Jose Santiago are expected to be added to the quarter.
For the fiscal full year 2025, the company expects revenues of $60 billion to $61 billion versus $60.83 billion consensus estimates. Adjusted EBITDA for the fiscal full year 2025 is expected to be between $1.6 billion and $1.7 billion.
Performance Food Group CEO George Holm commented on the 2 recent acquisitions, “While small relative to PFG’s total business, we believe José Santiago will be accretive to earnings, cash flow, and margins immediately. Taken together, we believe these two deals position PFG very well for the future growth of the Southeastern United States and the Caribbean territories.”
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