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Premium Brands Holdings (TSE:PBH)
:PBH
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Premium Brands
(TSX:PBH)
62Neutral
Positive Factors
Acquisition Growth
The company has a long runway for acquisition growth, indicating potential for expansion and increased market presence.
Consumer Trends
The company is well-positioned to benefit from long-term and emerging consumer trends, which are expected to provide support for organic growth across Premium Brands' businesses.
Financial Flexibility
Premium Brands completed a $150 million convertible debenture offering, which increases financial flexibility.
Negative Factors
Customer Onboarding Delays
Customer onboarding delays have pushed some growth into the following year, suggesting potential short-term challenges.
Sales Challenges
Sales challenges at a major QSR customer drove the 3Q EBITDA miss while the new sales pipeline remains strong.
Tariff Risks
Tariff noise introduces some near-term risk with significant topline sales exposure.
Premium Brands (PBH) vs. S&P 500 (SPY)
Market Cap
C$3.54B
Dividend Yield4.29%
Average Volume (3M)115.51K
Price to Earnings (P/E)29.0
Beta (1Y)0.73
Revenue Growth0.71%
EPS Growth-9.79%
CountryCA
Employees11,524
SectorConsumer Defensive
Sector Strength67
IndustryPackaged Foods
Share Statistics
EPS (TTM)2.73
Shares Outstanding44,902,073
10 Day Avg. Volume190,692
30 Day Avg. Volume115,507
Financial Highlights & Ratios
PEG Ratio1.01
Price to Book (P/B)N/A
Price to Sales (P/S)0.55
Price to Cash Flow (P/CF)8.50
P/FCF Ratio6.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$103.80Price Target Upside31.71% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
Premium Brands Business Overview & Revenue Model
Company DescriptionPremium Brands Holdings Corporation, through its subsidiaries, manufactures and distributes food products primarily in Canada and the United States. It operates in two segments, Specialty Foods and Premium Food Distribution. The company provides meat products and snacks, deli products, beef jerky and halal, sandwiches, pastries, specialty and gourmet products, salads and kettle products, entrees, panini, wraps, subs, hamburgers, burgers, muffins, breads, pastas, and baking and sushi products, as well as processed meat products and ready-to-eat meals. It is also involved in the distribution of food products, including meat, seafood, and halal food products; operation of retail/convenience store and concessionary; and provision of food and seafood processing, and cold storage services. The company operates under the brand names of Grimm's, Freybe, Piller's, Black Kassel, MarcAngelo, Oberto, Bavarian Meats, McSweeney's, Cattleman's Cut, Harvest Meats, Hempler's, Pacific Gold Country, Prime Meats, Isernio's, Fletcher's (U.S.), Leadbetters, Mclean Meats, Shahir, Expresco, Fresh Additions, Lou's Kitchen, WestEnd, Cobblestone, Yorkshire Valley Farms, Premier Meats, Black River Angus, La Maison Du Gibier, Belmont Meats, Purely Crafted, Cowboy, Connie's Kitchen, Skoulakis, Premier Healthy Living, Raybern's, Hygaard, Quality Fast Foods, Buddy's, Bread Garden Go, Stovers Kitchen, Deli Chef, Leonetti's, Island City, Stuyver's, La Boulangerie, Vero Vero, Alive & Rise, Partners, Audrey's, Duso's, Gourmet Chef, Smart Soup, Clearwater, Hancock Gourmet, Diana's Seafood, Marco Polo, Seafood Lover, Ready Brothers, Cold Cracked Lobster, Maximum Seafood, Rocky Point. It serves chains and large format retailers, independent and specialty retailers, foodservice operators, foodservice distributors, and other food manufacturers and food brokers. The company was founded in 1917 and is headquartered in Richmond, Canada.
How the Company Makes MoneyPremium Brands makes money primarily through the manufacturing and distribution of specialty food products. The company's revenue streams include the sale of ready-to-eat products, fresh and processed meats, and premium specialty foods to a diverse customer base. Key revenue sources are its specialty food manufacturing, which involves producing high-quality, branded food products, and its food distribution business, which delivers these products to retailers, foodservice operators, and other customers. The company benefits from strategic partnerships with retailers and foodservice operators, as well as acquisitions of complementary businesses that expand its market reach and product offerings. Additionally, Premium Brands emphasizes innovation and brand development to drive growth and maintain a competitive edge in the specialty food market.
Premium Brands Financial Statement Overview
Summary
Premium Brands shows solid revenue growth and operational efficiency. However, the high leverage and negative free cash flow present financial risks, necessitating improvements in cash flow management and profitability.Income Statement
Premium Brands has shown consistent revenue growth, with a notable increase from $6.02 billion in 2022 to $6.39 billion TTM. The gross profit margin for TTM stands at 17.01%, and the net profit margin is 1.55%. However, there is a slight decline in the EBITDA margin from 7.48% in 2022 to 8.49% TTM. The company maintains strong EBIT and EBITDA margins, reflecting operational efficiency. Still, the low net profit margin indicates room for improving bottom-line efficiency.78
Positive
Balance Sheet
The balance sheet shows a high debt-to-equity ratio of 1.63 TTM, indicating significant leverage, which can be a risk factor. The equity ratio is moderate at 32.81%, indicating a balanced reliance on equity to finance assets. Return on equity is relatively low at 5.69% TTM, suggesting limited effectiveness in generating returns on shareholder investments.65
Positive
Cash Flow
Operating cash flow decreased from $433.9 million in 2023 to $338.6 million TTM. The free cash flow is negative at -$77.5 million TTM, indicating challenges in maintaining liquidity. The operating cash flow to net income ratio is 3.41 TTM, suggesting strong cash generation relative to net income, but the negative free cash flow highlights potential cash management issues.55
Neutral
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 6.39B | 6.26B | 6.03B | 4.93B | 4.07B | 3.65B | Gross Profit |
| 1.09B | 1.05B | 1.10B | 901.90M | 780.20M | 725.30M | EBIT |
| 346.40M | 338.20M | 322.00M | 285.90M | 189.40M | 194.70M | EBITDA |
| 542.20M | 468.50M | 483.50M | 387.30M | 295.60M | 288.60M | Net Income Common Stockholders |
| 99.20M | 94.20M | 160.10M | 132.70M | 83.70M | 84.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 19.40M | 27.60M | 11.40M | 16.50M | 363.00M | 18.40M | Total Assets |
| 2.45B | 5.16B | 5.08B | 4.41B | 3.54B | 2.94B | Total Debt |
| 1.13B | 2.63B | 2.56B | 1.94B | 1.33B | 1.33B | Net Debt |
| 1.11B | 2.61B | 2.55B | 1.92B | 966.70M | 1.32B | Total Liabilities |
| 1.63B | 3.39B | 3.27B | 2.63B | 1.94B | 1.87B | Stockholders Equity |
| 823.90M | 1.77B | 1.81B | 1.77B | 1.60B | 1.07B |
| Cash Flow | Free Cash Flow | ||||
| -77.50M | 34.20M | -131.90M | -76.90M | 134.70M | 76.30M | Operating Cash Flow |
| 338.60M | 433.90M | 96.50M | 66.30M | 227.30M | 164.20M | Investing Cash Flow |
| -323.30M | -299.20M | -343.60M | -808.90M | -242.90M | -185.70M | Financing Cash Flow |
| -46.80M | -118.50M | 242.00M | 396.10M | 360.20M | 20.50M |
Premium Brands Technical Analysis
Positive
78.81
Price Trends
77.92
Positive
78.54
Positive
84.09
Negative
Market Momentum
0.36
Negative
52.02
Neutral
61.33
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:PBH, the sentiment is Positive. The current price of 78.81 is above the 20-day moving average (MA) of 78.08, above the 50-day MA of 77.92, and below the 200-day MA of 84.09, indicating a neutral trend. The MACD of 0.36 indicates Negative momentum. The RSI at 52.02 is Neutral, neither overbought nor oversold. The STOCH value of 61.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:PBH.
Premium Brands Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | C$21.34B | 22.43 | 13.78% | 1.43% | 1.59% | -1.98% | |
77 Outperform | C$66.60B | 18.70 | 18.66% | 1.04% | 11.62% | -8.08% | |
69 Neutral | C$2.35B | 17.68 | 18.50% | 3.26% | 3.28% | 1.42% | |
62 Neutral | $20.55B | 13.83 | -10.11% | 7.30% | 1.62% | 5.62% | |
62 Neutral | C$3.54B | 28.99 | 6.86% | 4.29% | 0.71% | -9.79% | |
56 Neutral | C$10.57B | 42.30 | -2.28% | 2.99% | 9.20% | -147.37% |
* Consumer Defensive Sector Average
Performance Comparison
TSE:PBH
Premium Brands
78.81
-7.84
-9.05%
LBLCF
Loblaw Companies
137.56
27.72
25.24%
TSE:ATD
Alimentation Couche-Tard Inc
69.78
-5.13
-6.85%
TSE:MRU
Metro Inc.
97.75
26.33
36.87%
TSE:NWC
North West
49.05
11.64
31.11%
TSE:SAP
Saputo Inc.
25.10
-0.66
-2.56%
Premium Brands Earnings Call Summary
Earnings Call Date: Mar 21, 2025 | % Change Since: 4.73% | Next Earnings Date: May 19, 2025
Earnings Call Sentiment Positive
The earnings call presented a positive outlook with record sales and EBITDA growth, driven by strategic acquisitions and strong U.S. market performance. Despite challenges from tariff uncertainty and temporary sales issues, the company maintains a strong liquidity position and forecasts record growth for 2025.Highlights
Record Sales and EBITDA Growth
Sales for the year increased by $210 million or 3.3% to $6.5 billion, with adjusted EBITDA margins expanding by 30 basis points to 9.2%. This marks the third consecutive year of EBITDA margin expansion.
Strong Performance in U.S. Markets
Organic volume growth from U.S.-focused sales initiatives contributed $55 million, with U.S. sales initiatives in Protein, Sandwich, and Bakery Groups driving over 20% growth in organic volume.
Strategic Acquisitions
Recent acquisitions of Casa, NSP Quality Meats, Italia Salami Company, and Denmark Sausage expand capacity in high-growth categories benefiting from favorable consumer trends.
Projected Record Growth in 2025
Projected revenue growth to $7.2 billion - $7.4 billion and adjusted EBITDA to $680 million - $700 million for 2025, driven by U.S. sales initiatives and recent acquisitions.
Strong Liquidity Position
Company finished the quarter with $583 million in unused credit capacity, and an offering of convertible debentures resulted in net proceeds of $144 million.
Lowlights
Impact of Tariff Uncertainty
Current uncertainty around tariffs has led to a decision to hold off on increasing the dividend rate for 2025 until there is better clarity.
Temporary Sales Challenges
Lower lobster sales due to poor Maine fishery and postponed customer orders, along with a decline in sandwich volumes with a major foodservice customer.
Increased Debt Leverage
Senior debt to EBITDA ratio increased to 3.5:1 and total debt to EBITDA ratio to 4.5:1, due to a weakening Canadian dollar affecting U.S. denominated debt.
Higher Cost Environment
Higher depreciation, interest, and lease costs associated with major capacity expansion projects, and a higher interest rate environment affected earnings.
Company Guidance
During the 2024 Year-End Conference Call, Premium Brands reported solid financial performance and strategic progress. Sales increased by $210 million or 3.3% to reach $6.5 billion, while adjusted EBITDA margins expanded by 30 basis points to 9.2%. The company's U.S.-focused initiatives, particularly in the Protein, Sandwich, and Bakery Groups, were key drivers, with U.S. sales rising by over 20% in some categories. Despite challenges like lower lobster sales and reduced sandwich volumes with a major customer, the company achieved quarterly sales of $1.64 billion, up 5.4% from the previous year. Adjusted EBITDA for the quarter rose 8.4% to $148.7 million, and adjusted earnings per share increased to $1.05 from $0.85. The company maintained a strong financial position with $583 million in unused credit capacity and plans to manage debt levels, which were slightly impacted by currency fluctuations. Looking forward, Premium Brands projects 2025 revenues between $7.2 billion and $7.4 billion and expects both adjusted earnings and earnings per share to reach record levels, driven by ongoing U.S. sales initiatives and market stabilization in Canada.Premium Brands Corporate Events
Premium Brands Expands with New Acquisitions
Dec 30, 2024
Premium Brands Holdings Corporation has expanded its portfolio by acquiring three specialty food manufacturers: NSP Quality Meats, Casa Di Bertacchi, and Italia Salami, expecting these transactions to boost its 2025 earnings. Additionally, the company has generated significant funds through the sale and leaseback of its Washington deli meats facility.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.