Stock Analysis

At US$45.81, Is Performance Food Group Company (NYSE:PFGC) Worth Looking At Closely?

NYSE:PFGC
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Performance Food Group Company (NYSE:PFGC), is not the largest company out there, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$53.32 and falling to the lows of US$42.95. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Performance Food Group's current trading price of US$45.81 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Performance Food Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out the opportunities and risks within the US Consumer Retailing industry.

What's The Opportunity In Performance Food Group?

Performance Food Group is currently expensive based on my price multiple model, where I look at the company's price-to-earnings ratio in comparison to the industry average. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Performance Food Group’s ratio of 63.39x is above its peer average of 17.98x, which suggests the stock is trading at a higher price compared to the Consumer Retailing industry. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Performance Food Group’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Performance Food Group look like?

earnings-and-revenue-growth
NYSE:PFGC Earnings and Revenue Growth October 18th 2022

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Performance Food Group's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in PFGC’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe PFGC should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on PFGC for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for PFGC, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Performance Food Group at this point in time. To that end, you should learn about the 2 warning signs we've spotted with Performance Food Group (including 1 which is a bit concerning).

If you are no longer interested in Performance Food Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.