Performance Food Group (PFGC:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Performance Food Group(PFGC:NYS)

Consumer Defensive:Food Distribution

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Close Price/Date
$29.71 (USD) 24/10/2018

Weighted Valuation
$35.45 (USD)

Overall Rating
Undervalued by 19.3%

Valuation Models Analyst Consensus: $35.00 (USD)
(in order of importance) Adjusted Book Value: $36.14 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation

Company Overview (PFGC:NYS USD)

Price 29.71
Range 29.61 – 30.53
52 week 26.80 – 38.90
Open 30.30
Vol / Avg. 807925/826303
Mkt cap 3.13B
P/E 15.64
Div/yield 0.00/0.00
EPS 1.90
Shares 105.19M
Beta 0.00

Company Description

Performance Food Group distributes a wide variety of food and food-related products to restaurants, hospitals, cafeterias, hotels, schools, theaters, big-box retailers, and vending distributors. The company markets more than 150,000 national brand and private-label items sourced from over 5,000 suppliers. PFG serves north of 150,000 customers from over 70 distribution centers through three operating segments: broadline (Performance Foodservice), customized distribution (Customized), and specialty (Vistar). The firm was bought in a leveraged buyout in 2008 by Blackstone and Wellspring and began trading publicly in 2015.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for PFGC:NYS

Using a discounted cash flow model we generated an intrinsic value of $63.36 (USD) for PFGC:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

PFGC:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $63.36 1% 5% 1% 5%
WACC (or Ke) 5.06 $82.74 $50.49
Terminal Growth Rate 0.10 $51.47 $81.25
Tax Rate 0.03 $67.92 $58.92
Cash Flow 564,463,900 $58.17 $68.55
Capital Expenditures -116,211,800 $62.42 $64.30
Long Term Debt 1,266,600,000 $63.96 $62.76

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $44.86 (USD) for PFGC:NYS. We also generated a valuation of $24.08 (USD) using other metrics and comparables.
The comparable companies were Andersons (ANDE:NAS), The Chefs’ Warehouse (CHEF:NAS), Core-Mark Holding Co (CORE:NAS), United Natural Foods (UNFI:NAS) and US Foods Holding (USFD:NYS).

Company PFGC:NYS End Date Value
Earnings/Share $1.90 (USD)
Book Value/Share $10.79 (USD)
Sales/Share $168.45 (USD)
Cash Flow/Share $3.51 (USD)
EBITDA/Share $3.67 (USD)
Price Based on Comps Adjustment Factor (%)
$49.54 (USD) 0.0
$24.69 (USD) 0.0
$53.87 (USD) 0.0
$47.63 (USD) 0.0
$48.58 (USD) 0.0
17.53 PE Ratio 26.07 11.58 50.49 46.52 9.19 12.58
3.09 PB Ratio 2.29 1.30 4.25 2.85 0.82 2.21
0.20 PS Ratio 0.32 0.32 0.76 0.10 0.15 0.28
9.49 PCF Ratio 16.80 13.94 36.14 10.15 13.91 9.87
12.18 EV to EBITDA 13.23 11.39 20.22 18.57 5.83 10.12


Using a multiples approach we generated a valuation of  $42.71 (USD) for PFGC:NYS

Company PFGC:NYS End Date Value
Earnings/Share $1.90 (USD)
Book Value/Share $10.79 (USD)
Sales/Share $168.45 (USD)
Cash Flow/Share $3.51 (USD)
EBITDA/Share $3.67 (USD)
Price Based on Comps Adjustment Factor
$63.32 (USD) 0
$35.56 (USD) 0
$26.67 (USD) 0
$41.31 (USD) 0
$46.69 (USD) 0
Ratios Ratio Average
PE Ratio 33.33
PB Ratio 3.30
PS Ratio 0.16
PCF Ratio 11.77
EV to EBITDA 12.71

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  PFGC:NYS for the last 3 years was  3.28

We ran the Adjusted Book Value for  PFGC:NYS and generated a book value of  $11.00 (USD)
By multiplying these we get an adjusted valuation of  $36.14 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for PFGC:NYS. The 2 analysts have a concensus valuation for PFGC:NYS for 2019 of $35.00 (USD).

PFGC:NYS Performance Food Group

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 2 0 3.2500 Hold 2018-10-23

Current Price: 29.71 USD

Analyst Consensus
USD Millions 2019 2020 2021
Mean EPS 1.78 2.07 2.38
# EPS Analysts 3 2 1
Mean Revenue 18,552.30 19,663.20 21,104.50
# Revenue Analysts 3 2 1
Mean Target Price 35.00
Mean Cash Flow 3.07 3.09 3.45
Mean EBITDA 471.00 511.40 563.90
Mean Net Income 185.90 217.70 250.00
Mean Debt Outstanding 1,046.20 917.00 759.80
Mean Tax Rate 27.00 27.00
Mean Growth Rate 14.69
Mean Capital Expenditure 154.40 195.00 205.00

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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