Performance Food Reports Quarterly Beat; Shares Drop 4.2%

Performance Food Group Company (PFGC) reported stronger-than-expected fiscal Q4 results driven by strong sales momentum across its Foodservice and Vistar segments despite labor constraints faced during the quarter.

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However, shares of the marketer and distributor of food products were down 4.2% on Thursday to close at $42.92.

Adjusted earnings of $0.56 per share beat analysts’ expectations of $0.55 per share and were much better than an adjusted loss of $0.86 per share reported in the prior-year period. (See Performance Food stock charts on TipRanks)

Furthermore, revenues jumped 61.1% year-over-year to $9.3 billion and exceeded consensus estimates of $8.43 billion. The increase in revenues reflected strong momentum, with total case volume up 55.8%.

PFG CEO George Holm commented, “In addition to the strong operating results to close out the fiscal year, we made significant headway integrating Reinhart and announced the intention to acquire Core-Mark, creating one of the largest food and convenience store delivery companies in the US.”

Holm further added, “Our financial position also remains strong, including improvement in our working capital metrics and a strong liquidity and balance sheet position. We remain confident that our company is well positioned to succeed in the years ahead.”

Following the Q4 earnings results, BTIG analyst Peter Saleh downgraded the stock from Buy to Hold.

Saleh is of the opinion that “much of the COVID recovery is already reflected in the share price.” He further estimates that the company’s performance “could be choppy” in the future as the company struggles with the integration of the Core-Mark acquisition.

Consensus among analysts is a Strong Buy based on 4 Buys and 1 Hold. The average Performance Food price target of $63.67 implies 48.4% upside potential to current levels.

PFGC scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.