
TSE:PBH
This summary was created by AI, based on 18 opinions in the last 12 months.
Premium Brands Holdings Corp (PBH) has garnered mixed reviews from analysts regarding its recent performance and growth prospects. The company is viewed positively for its expansion efforts into the U.S. and its partnerships with major clients like Costco and Starbucks, which are expected to drive revenue growth despite potential economic headwinds. Some experts express concerns about high debt levels and aggressive accounting practices, with some recommending a cautious approach to investing. The stock saw a decline recently but is perceived to have strong management and a promising growth trajectory, leading to differing views on its short-term performance and long-term potential. Analysts have varied price targets, indicating differing opinions on its value relative to its current price.
After its 35% run this year it is perhaps more vulnerable to profit taking if it misses earnings next week. But we do like the company and the positive momentum is encouraging. We would be fine holding it for the long term, but would keep position size in mind after its recent run up.
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Debt is high, with a debt-to-equity ratio of 1.5 and a net debt/EBITDA of 6.1X, and profit margins are thin, but management has successfully used debt to inorganically grow the company, and this is demonstrated through its top-line sales growth. The recent move comes alongside its reiteration of guidance for the year as well as a bit of valuation re-rating - its forward earnings multiple has expanded from 13X in late 2022 to 23X currently.
It has missed its last few earnings results, although, the price has continued to rise despite this. We feel that if its earnings are OK or better than expected in August, the stock could continue to climb as signs of peak interest rates and earnings growth appear.
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IT has lagged due to inflationary costs but pricing has caught up. It is noteworthy that 85% of its revenue growth will be organic in its five year growth plan. There are 18 projects planned , 11 of which have been started. It will source more prepaid food options. It is building a 500,000
square foot sandwich making facility in the U.S.
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The company saw a good amount of revenue growth from selling price inflation. They also have demonstrated being able to pass on inflation over the past year. Input costs may rise but they should be able to pass on higher costs to customers. There could be some pressure in the near term, but long term outlook is positive. Unlock Premium - Try 5i Free
Still owns shares in company, and has been buying more lately. Last two years has impacted bottom line with inflation. Great management team with excellent capital allocation skills. Very strong long term investment. Good time to buy at current share price.