Performance Food Group (PFGC)

Food distribution giant Performance Food Group (NYSE:PFGC) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 10.8% year on year to $17.08 billion. The company’s full-year revenue guidance of $68 billion at the midpoint came in 1.1% above analysts’ estimates. Its non-GAAP profit of $1.18 per share was 2.3% below analysts’ consensus estimates.

Company Overview

With a massive network spanning 155 distribution centers and delivering over 250,000 different food products, Performance Food Group (NYSE:PFGC) distributes food and food-related products to over 300,000 restaurants, convenience stores, theaters, and institutions across North America.

Distributors serve as intermediaries connecting manufacturers with retailers or end customers, managing logistics, inventory, and fulfillment across various product categories. Tailwinds include supply chain complexity driving demand for specialized distribution expertise, e-commerce growth requiring robust fulfillment networks, and businesses outsourcing logistics to focus on core operations. Consolidation opportunities may benefit scale players. Headwinds include margin pressure from powerful suppliers and customers, competition from manufacturers selling direct, and rising transportation and labor costs. Additionally, economic downturns reduce demand volumes, while inventory management challenges and potential supply chain disruptions introduce operational risks requiring sophisticated systems.

Performance Food Group competes with other major food distributors including Sysco Corporation (NYSE: SYY), US Foods Holding Corp (NYSE: USFD), and United Natural Foods (NYSE: UNFI), as well as with regional distributors and wholesale club stores that serve food service establishments.

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Performance Food Group grew its sales at a 20.2% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Performance Food Group’s recent performance shows its demand has slowed as its annualized revenue growth of 6.3% over the last two years was below its five-year trend.

We can dig further into the company’s revenue dynamics by analyzing its number of units sold. Over the last two years, Performance Food Group’s units sold averaged 5.8% year-on-year growth. Because this number is in line with its revenue growth, we can see the company kept its prices fairly consistent.

This quarter, Performance Food Group reported year-on-year revenue growth of 10.8%, and its $17.08 billion of revenue exceeded Wall Street’s estimates by 1.2%.

Looking ahead, sell-side analysts expect revenue to grow 5.7% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and indicates its newer products and services will not lead to better top-line performance yet.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Performance Food Group’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 1.3% over the last two years. This profitability was inadequate for a consumer discretionary business and caused by its suboptimal cost structure.

In Q3, Performance Food Group generated an operating margin profit margin of 1.3%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Performance Food Group’s EPS grew at a remarkable 52.3% compounded annual growth rate over the last five years, higher than its 20.2% annualized revenue growth. However, we take this with a grain of salt because its operating margin didn’t improve and it didn’t repurchase its shares, meaning the delta came from reduced interest expenses or taxes.

In Q3, Performance Food Group reported adjusted EPS of $1.18, up from $1.16 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Performance Food Group’s full-year EPS of $4.50 to grow 15.5%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Performance Food Group has shown poor cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 1%, lousy for a consumer discretionary business.

Performance Food Group burned through $223.2 million of cash in Q3, equivalent to a negative 1.3% margin. The company’s cash burn increased from $42 million of lost cash in the same quarter last year. These numbers deviate from its longer-term margin, indicating it is a seasonal business that must build up inventory during certain quarters.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Performance Food Group historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 5.4%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Performance Food Group’s ROIC averaged 3.5 percentage point increases over the last few years. This is a good sign, and we hope the company can continue improving.

Performance Food Group reported $38.1 million of cash and $8.3 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.84 billion of EBITDA over the last 12 months, we view Performance Food Group’s 4.5× net-debt-to-EBITDA ratio as safe. We also see its $187.2 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see Performance Food Group provide full-year revenue guidance that slightly beat analysts’ expectations. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its EPS missed and its full-year EBITDA guidance fell slightly short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock remained flat at $96.84 immediately after reporting.

Updated: January 15, 2026 at 11:51 PM EST

Before making an investment decision, investors should account for Performance Food Group’s business fundamentals and valuation in addition to what happened in the latest quarter.

We cheer for all companies serving everyday consumers, but in the case of Performance Food Group, we’ll be cheering from the sidelines. For starters, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its remarkable EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its . On top of that, its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

Performance Food Group’s P/E ratio based on the next 12 months is 18.1x. While this valuation is reasonable, we don’t see a big opportunity at the moment. There are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $119.42 on the company (compared to the current share price of $96.86).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.