Phibro Animal Health Corporation (PAHC): what the price assumes

boothcheck covers Phibro Animal Health Corporation (PAHC) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-06-27.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/PAHC

Headline

FieldValue
TickerPAHC
CompanyPhibro Animal Health Corporation
Current price$36.15/sh
CompositionMFAs and other (Animal Health) 50% / Nutritional specialties (Animal Health) 14% / Vaccines (Animal Health) 11% / Mineral Nutrition 20% / Performance Products 6%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)1.9%
Operating margin today12.0%
Margin compression (value-band)-10.1pp
Multiple paid12x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7.4% cost of capital with 4% terminal growth over a 5-year stage.

Reconcile: at the x-ray's 9.3% required return this reads ~0.1%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.60σ
cohort percentile (of 117 peers)15
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.44x5expensive
Earnings1.43x3expensive
Relative0.85x2justifies
Growth0.76x3justifies

Families that justify the price: Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.7%); the inversion above states its own rate.

Per-Model Detail (n=13)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$16.952.13xyesFCF base $0.0B, growth 25% (input: historical growth), terminal g 4.0%, WACC 6.7%, 7yr projection
DCF Exit MultipleGrowth$47.850.76xyesExit EV/EBITDA: 7.2x / 9.2x / 11.2x (bear / base = today's held flat / bull), 7yr
Relative ValuationRelativenoP/E 24x (static sector reference · 2026-04), scenarios: 19.3x / 24.0x / 28.7x (bear / base = reference held flat / bull), EV/EBITDA 16x
Simple DDMGrowthno
Two-Stage DDMGrowthno
Simple Excess ReturnAsset$25.091.44xyesBV/sh $8.82, ROE (TTM) 26.3%, ke 9.3%
Two-Stage Excess ReturnAsset$42.800.84xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$49.140.74xyesRev $1.5B, growth 27% (input: historical growth; tapered), Terminal P/S: 0.8x / 1.0x / 1.2x (bear / base = today's held flat / bull, cap 12x)
Peter Lynch Fair ValueRelative$28.081.29xyesEPS $2.34, growth 2% (input: historical EPS growth), PEG=7.79 (Overvalued)
Margin TrajectoryGrowthno
Earnings Power ValueEarnings$11.103.26xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.10B × (1−26%) / WACC 6.7% → EPV (no growth)
Residual IncomeAsset$37.430.97xyesBV $8.82 + 5yr PV of (ROE (TTM) 26.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$21.551.68xyes√(22.5 × EPS $2.34 × BVPS $8.82) — Graham's conservative floor
EV/EBITDA RelativeRelativenoEBITDA $0.23B × sector EV/EBITDA 16.0x
FCF YieldEarnings$0.013614.50xyesFCF $12.8M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarnings$0.013614.50xyesSBC-adj FCF $0.01B (FCF $0.01B − SBC $0.00B) capitalized at Kₑ (excluded from median)
Ben Graham FormulaEarnings$75.500.48xyesEPS $2.34 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$4.388.25xyesBV $8.82 × (ROIC 3.3% / WACC 6.7%)
P/Sales SectorRelativenoRevenue $1.50B × sector P/S 4.0x
PEG Fair ValueRelative$87.750.41xyesEPS $2.34 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$25.301.43xyesEPS $2.34 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelativeno
Clinical Phase NPVGrowthno
MertonAssetno
V5 Mechanicalno

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

UnitRoleValuation basisRevenueReported profitValue evidenceStatus
Animal Healthoperatingenterprise$962.8mwithheldunresolved no unit value
Mineral Nutritionoperatingenterprise$253.2mwithheldunresolved no unit value
Performance Productsoperatingenterprise$80.2mwithheldunresolved no unit value

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

FieldValue
Net debt$565.9m
Net debt / NOPAT (after-tax)4.23x
Net debt / operating income (pre-tax)3.14x
Interest coverage4.0x
Share count CAGR (dilution)0.3%
Burning cashno

Bullet Takeaways

Bull Case

Begin with how far the price sits below the methods, because for Phibro that gap is the whole opportunity. At $31.95 (June 27, 2026) the stock trades at only about 11x company-wide operating income, a multiple the model reads as below what even a 5%-a-year operating-profit decline would warrant. Yet this is not a declining business. When most reasonable valuation frames land above the current price for a company that is actually growing, the market is mispricing the durability of the cash flows.

The growth engine is animal health, supercharged by acquisition. Phibro makes medicated feed additives, vaccines, nutritional specialties, and other products for livestock and companion animals, a defensive end-market tied to global protein demand rather than the economic cycle. The October 2024 acquisition of a portfolio of Zoetis medicated-feed-additive products transformed the scale: nine-month net sales climbed 22% to $1.12 billion, with Animal Health revenue up 29% to $864.7 million led by medicated feed additives (Phibro Q3 FY2026, Simply Wall St). The most recent quarter kept the momentum, with net sales up 10% to $383.5 million and EPS up 16% (Phibro Q3 FY2026, stocktitan). The filings also point to a companion-animal development pipeline including a potential treatment for canine mitral valve disease (FY2025 10-K, accession 0001558370-25-011776), an option on a higher-margin, faster-growing market.

The profitability and guidance back the case. Q3 adjusted EBITDA rose 11% to $60 million, and management raised full-year fiscal 2026 net-sales guidance to $1.46 billion to $1.5 billion (13% to 16% growth) and adjusted EBITDA to $247 million to $255 million, a 34% to 39% increase (Phibro Q3 FY2026, Yahoo Finance). The return on equity runs in the mid-20s and interest coverage is about 4x. The bull case is a defensive, double-digit-growing animal-health business that just transformed its scale through the Zoetis deal, trading at a single-digit-to-low-teens operating-income multiple while the methods point higher.

Bear Case

The bear case starts with competition and disruption, because Phibro sits in a market dominated by far larger players. Zoetis, Elanco, Merck Animal Health, and Boehringer Ingelheim are the giants of animal health, with deeper research budgets and broader distribution than Phibro can match. Phibro's growth leans heavily on medicated feed additives, a category facing a structural headwind: regulatory and consumer pressure to reduce antibiotic use in livestock has been building for years, and a faster shift toward antibiotic-free protein production would erode the demand for exactly the products driving Phibro's recent growth. The cheap multiple may be the market pricing the risk that the core franchise is on the wrong side of a long-term trend.

The acquisition that powered the growth also concentrated the risk. The 22% nine-month sales jump was driven largely by the October 2024 Zoetis portfolio purchase, which means much of the headline growth is acquired rather than organic, and the company now carries the integration risk and the debt that funded it. Net debt sits near $566 million against trailing operating income of about $180 million, leverage above 3x, and interest coverage of about 4x is adequate but not comfortable. A roll-up of feed-additive product lines must keep integrating and must keep the acquired revenue from leaking to competitors, and the bigger the acquired base, the more a stumble matters.

The valuation cushion is thinner than the headline multiple suggests once the distorted methods are set aside. The Earnings Power Value method lands at just $12 and the FCF-yield methods print near zero, reflecting that free cash flow is currently thin because the business is investing and integrating, so the cash generation does not yet match the reported earnings. The Peter Lynch screen reads overvalued on a high PEG because trailing EPS growth has been modest. The reverse-DCF floored at the current price, meaning the inversion could not find much positive growth implied, which on the bull side reads as cheap but on the bear side reads as the market refusing to underwrite future growth at all. The peer cohort here is a set of small pharma and biotech names rather than direct animal-health comparables, which makes the relative read noisy. The bear case is a sub-scale player in a consolidating, regulation-exposed market, carrying acquisition debt and thin free cash flow, where the low multiple reflects real doubts about whether the recent growth is durable.

Valuation

Phibro screens as a value name where most credible methods sit above the price. Several methods are distorted and should be ignored: the Earnings Power Value figure ($12) and the FCF-yield figures (near zero) reflect thin trailing free cash flow during the integration and investment phase, and the P/Sales figure near $146 is an artifact of applying a high sector revenue multiple.

The inversion confirms the cheapness. At $31.95 the market pays about 11x company-wide operating income, computed at a 7.3% cost of capital with 4% terminal growth, a multiple so low it sits below what even a 5%-a-year operating-profit decline would warrant. That is a bound, not a solved growth rate: the price embeds an assumption that operating profit slowly erodes, even though the company is guiding to 13% to 16% net-sales growth and a 34% to 39% jump in adjusted EBITDA this fiscal year. The reverse-DCF floored at the current price, meaning it could not find a positive growth scenario the price implies. The honest read is that Phibro is priced for stagnation while it is actually growing double digits post-Zoetis. The gap between the cheap multiple and the credible method cluster in the low-to-mid $40s is the upside; the risk is whether the antibiotic-use headwind and the acquisition-driven nature of the growth make the market right to doubt durability. For a value buyer, the methods say there is room; the catch is the structural questions the low multiple is pricing.

Catalysts

Phibro reported fiscal Q3 2026 results (quarter ended March 31, 2026) on May 6, 2026, with net sales up 10% to $383.5 million, diluted EPS up 16%, and adjusted EBITDA up 11% to $60 million; the stock rose about 11.4% on the print (Phibro Q3 FY2026, Simply Wall St). Nine-month net sales climbed 22% to $1.12 billion, driven largely by the October 2024 Zoetis medicated-feed-additive portfolio acquisition, with Animal Health revenue up 29% to $864.7 million (Phibro Q3 FY2026, stocktitan).

The forward setup is a raised guide with integration and pipeline catalysts. Management updated full-year fiscal 2026 guidance to net sales of $1.46 billion to $1.5 billion (13% to 16% growth) and adjusted EBITDA of $247 million to $255 million (34% to 39% growth) (Phibro Q3 FY2026, Yahoo Finance). The catalysts to track are the continued integration and organic performance of the Zoetis portfolio, the trajectory of medicated-feed-additive demand against the long-term antibiotic-reduction trend, progress on the companion-animal pipeline (including the potential canine mitral-valve-disease treatment), debt reduction against the acquisition leverage, and free-cash-flow conversion improving as the integration matures. Because Phibro's fiscal year ends in June, the Q4 and full-year fiscal 2026 print is the next checkpoint for whether the post-Zoetis growth and margin expansion hold.

Peer Cohorts (Per Segment, With Filing Citations)

Animal Health (reported)

Mineral Nutrition (reported)

Performance Products (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive PAHC report on boothcheck