Performance Food Group Company (PFGC): what the price requires
At today's price, Performance Food Group Company (PFGC) is priced for today's economics sustained for ~5.3 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/PFGC
Headline
| Field | Value |
|---|---|
| Ticker | PFGC |
| Company | Performance Food Group Company |
| Current price | $113.27/sh |
| Composition | Cigarettes 23% / Center of the plate 21% / Frozen Foods 10% / Canned and dry groceries 10% / Candy/snack/theater and concession 8% / Refrigerated and dairy products 8% / Paper products and cleaning supplies 6% / Beverage 6% / Other tobacco products 5% / Produce 2% / Other miscellaneous goods and services 1% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 1.3% |
| Operating margin today | 1.1% |
| Margin expansion implied | +0.2pp |
| Must persist for | 5.3y |
| Multiple paid | 35x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 8.3% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.9 years.
How unusual the bet is: high
| Reference | Value |
|---|---|
| vs own history | +0.09σ |
| cohort percentile (of 69 peers) | 86 |
| sustained it ~5.3 years at this level | 29% |
| implied end-window share | 1% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 5.42x | 4 | expensive |
| Earnings | 4.52x | 4 | expensive |
| Relative | 1.06x | 3 | expensive |
| Growth | 0.84x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.2%); the inversion above states its own rate.
Per-Model Detail (n=14)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $194.27 | 0.58x | yes | FCF base $1.1B, growth 8% (input: historical growth), terminal g 4.0%, WACC 7.2%, 6yr projection |
| DCF Exit Multiple | Growth | $135.13 | 0.84x | yes | Exit EV/EBITDA: 12.7x / 14.7x / 16.7x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $89.14 | 1.27x | yes | P/E 31.64x (blended: static sector reference 22x + trailing (TTM) 54x), scenarios: 26.3x / 31.6x / 37.0x (bear / base = reference held flat / bull), EV/EBITDA 14x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $22.62 | 5.01x | yes | BV/sh $30.07, ROE (TTM) 7.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $19.45 | 5.82x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $92.37 | 1.23x | yes | Rev $66.7B, growth 8% (input: historical growth; tapered), Terminal P/S: 0.2x / 0.3x / 0.3x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $5.72 | 19.80x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.68B × (1−25%) / WACC 7.2% → EPV (no growth) |
| Residual Income | Asset | $18.99 | 5.96x | yes | BV $30.07 + 5yr PV of (ROE (TTM) 7.0% − Kₑ 9.3%) × BV; BV grows 4.5%/yr |
| Graham Number | Asset | $37.79 | 3.00x | yes | √(22.5 × EPS $2.11 × BVPS $30.07) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $106.45 | 1.06x | yes | EBITDA $1.63B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $31.27 | 3.62x | yes | FCF $1015.7M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $27.78 | 4.08x | yes | SBC-adj FCF $0.96B (FCF $1.02B − SBC $0.05B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $1.77 | 63.99x | yes | EPS $2.11 × (8.5 + 2×-4.0%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $4.30 | 26.34x | yes | BV $30.07 × (ROIC 1.0% / WACC 7.2%) (excluded from median) |
| P/Sales Sector | Relative | $850.31 | 0.13x | yes | Revenue $66.75B × sector P/S 2.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $22.81 | 4.97x | yes | EPS $2.11 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $6.9b |
| Net debt / NOPAT (after-tax) | 12.49x |
| Net debt / operating income (pre-tax) | 9.32x |
| Interest coverage | 1.8x |
| Share count CAGR (dilution) | 0.3% |
| Burning cash | no |
Bullet Takeaways
- Performance Food Group is a broadline food distributor that moves roughly $67 billion of product a year across three segments, Foodservice to restaurants, Convenience to gas-station and c-store chains, and Specialty, earning a razor-thin operating margin near 1% on enormous volume.
- The number that drives profitability is not revenue but mix: independent-restaurant case volume grew about 7.3% in the most recent quarter, and independent cases carry far higher margins than the chain and tobacco volume that fills the trucks.
- The defining risk is leverage against thin margins, with net debt around $6.8 billion at roughly eight times operating income and interest coverage near two times, layered on top of integration costs from the Cheney Brothers acquisition.
Bull Case
The counterintuitive thing about Performance Food Group is that a business earning barely a penny of operating profit on each dollar of sales is genuinely improving its economics, and you have to look past the headline margin to see it. The lever is mix. The trucks carry everything from cigarettes to canned groceries to fresh center-of-the-plate proteins, but the profit comes disproportionately from independent restaurants, which buy higher-margin products and value service over price. In the most recent quarter independent-restaurant case volume grew about 7.3%, and Foodservice independent case growth accelerated to around 6.5%, ahead of the company's own benchmark. Each point of independent case growth shifts the revenue mix toward the profitable end, which is why adjusted EBITDA can grow faster than sales even when the top line is held back by deflation.
The scale itself is the moat. Food distribution is a logistics business where the largest networks have a structural cost advantage: more distribution centers closer to customers, denser delivery routes, and the buying power that comes from moving the most volume. Performance Food Group sits among the three national broadliners, and it has been consolidating, acquiring Cheney Brothers, which adds roughly $3.2 billion of revenue and five distribution centers in the Southeast, with about $50 million of expected run-rate cost synergies. In a fragmented industry, a national player buying strong regional operators compounds the route density that drives the cost advantage.
The segment results show the model working across all three legs. Convenience adjusted EBITDA grew about 34% in the recent quarter on the onboarding of large chain customers like Love's and RaceTrac, and the company raised its full-year fiscal 2026 adjusted EBITDA guidance toward $1.9 billion to $1.93 billion. The valuation reflects an earnings-growth story rather than an asset story: the relative-multiple and growth-DCF methods reach the price, crediting the mid-single-digit-and-better EBITDA growth. For a distributor gaining share in its highest-margin channel while integrating an accretive acquisition, the bull case is operating leverage on a volume machine.
Bear Case
The structural truth a holder has to sit with is that this is a 1%-margin business carrying eight turns of leverage, and that combination leaves almost no room for error. Net debt of about $6.8 billion sits against trailing operating income, roughly eight times, with interest coverage near two times. When a business earns about a penny of operating profit per dollar of sales, a small move in input costs, freight, or labor swings the bottom line hard, because there is no margin cushion to absorb it. Distribution is a pass-through business in good times and a vise in bad ones: the company buys product, marks it up by a thin spread, and ships it, and that spread is exposed to deflation, which compresses dollar margins, and to wage and fuel inflation, which raises the cost of moving the boxes. The company has already flagged category deflation and elevated facility expenses as pressures on profitability.
The valuation does not price in that fragility. At today's price the asset-based and earnings-power methods read deeply expensive. The stock trades at a large multiple of its book value of about $30.07 per share, and capitalizing the company's normalized operating earnings at the cost of capital lands far below the price, because the actual earnings power, a 7% return on equity and EPS of about $2.11, is modest. The price requires the EBITDA growth and the margin-mix improvement to keep compounding, and it embeds an operating-income growth assumption around 24% that is well above what a low-margin distributor typically sustains. If the independent case growth slows, or if deflation persists and squeezes the spread, there is no static valuation method that frames the stock as anything but rich.
Integration is the near-term execution risk on top of the structural one. The Cheney Brothers acquisition has brought higher-than-expected integration costs that have pressured profit, and integrating a $3.2 billion regional distributor across distribution centers, systems, and customer relationships is exactly the kind of operationally intensive work that can leak margin in a business that has none to spare. The bear case is not that Performance Food Group is a bad operator; it is that a thinly-margined, heavily-levered distributor priced for sustained high EBITDA growth has very little buffer if deflation, freight costs, or integration friction interrupts the compounding the price assumes.
Valuation
The price is betting on operating leverage in a low-margin machine: that Performance Food Group keeps growing adjusted EBITDA in the mid-single digits and better by shifting its mix toward higher-margin independent-restaurant volume, even though its headline operating margin sits near 1%. The inversion frames the bet as roughly 24% operating-income growth, which sounds aggressive until you remember that on a 1% margin base, modest mix improvement and synergy capture can produce large percentage swings in operating profit. The bet is real but it is a bet on the mix and the synergies, not on the revenue line, which grows slowly.
The methods split the way they do for a thin-margin grower. The relative-multiple lens reaches the price, valuing the business at a distributor-sector enterprise-to-EBITDA multiple on about $1.63 billion of EBITDA, landing close to the current price. The growth-DCF methods also reach it by crediting the EBITDA growth forward. Where the methods say expensive is everything anchored on current earnings or assets: the book-value methods, with the stock at a large premium to its roughly $30 book value, and the earnings-power lens, which capitalizes the modest current profit far below the price. That divergence is the signature of a business valued on what its EBITDA becomes, not on what its net income is today. The earnings-based methods are not wrong; they are measuring a profit stream the market is looking past.
Solvency is the binding constraint and the reason the valuation matters. Net debt of about $6.8 billion at roughly eight times operating income, with interest coverage near two times, is a heavily-levered structure for a business with no margin cushion. The share count has been essentially flat, so there is no buyback supporting per-share value, and free cash flow, while positive at about $1 billion, services the debt before anything reaches holders. What the buyer is underwriting is execution: the independent case-mix improvement and the Cheney synergies have to keep lifting EBITDA, and deflation and freight costs have to stay contained, because the leverage amplifies any disappointment. The downside here is not asset value, which is thin, but the EBITDA holding its trajectory against a fixed and sizable debt load.
Catalysts
Performance Food Group's Q3 fiscal 2026 print beat on earnings and raised the profit outlook. Net sales were about $16.29 billion with adjusted EBITDA of $410.6 million, up about 6.6% year over year, and management raised and narrowed full-year fiscal 2026 adjusted EBITDA guidance to roughly $1.9 billion to $1.93 billion. Full-year net sales guidance was set near $67.25 billion to $68.25 billion. The standout was the channel mix: independent-restaurant case volume grew about 7.3%, and Convenience adjusted EBITDA jumped about 34% on the onboarding of large chain customers including Love's and RaceTrac. The next quarterly print is the read on whether independent case growth holds above the company's benchmark, which is the metric that drives margin mix.
The integration of Cheney Brothers is the swing factor. The acquisition adds roughly $3.2 billion of revenue and is expected to deliver about $50 million of run-rate cost synergies, but higher-than-expected integration costs have pressured near-term profit, alongside category deflation and elevated facility expenses. The developments to watch are the pace of synergy capture against integration spend, and whether deflation eases, since a thin-margin distributor's profit dollars move with the spread between what it buys and what it sells. Those two, synergy realization and the deflation backdrop, are the catalysts that determine whether the raised EBITDA guidance proves conservative or stretched.
Peer Cohorts (Per Segment, With Filing Citations)
Foodservice (reported)
- SYY (Sysco Corporation)
- (no filing in the citation store)
- USFD (US FOODS HOLDING CORP.)
- (no filing in the citation store)
- CHEF (CHEFS’ WAREHOUSE, INC.)
- (no filing in the citation store)
- UNFI (UNITED NATURAL FOODS, INC.)
- (no filing in the citation store)
Convenience (reported)
- UNFI (UNITED NATURAL FOODS, INC.)
- (no filing in the citation store)
- USFD (US FOODS HOLDING CORP.)
- (no filing in the citation store)
- SYY (Sysco Corporation)
- (no filing in the citation store)
Specialty (reported)
- UNFI (UNITED NATURAL FOODS, INC.)
- (no filing in the citation store)
- SYY (Sysco Corporation)
- (no filing in the citation store)
- USFD (US FOODS HOLDING CORP.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
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.
Sources
PFGC Q3 FY2026 results, 2026 · PFGC company disclosure, 2024-2026 · PFGC FY2026 guidance, 2026 · PFGC company disclosures, 2024-2026