PFD: Model update

Research evidence excerpt

PFD: Model update

Premier Foods PLC

Target/Upside/Downside Scenarios Investment summary

Premier is no more, but no less, than a competentlyPremier Foods PLC

managed food producer with robust competitive positions in

260 125 Weeks 22DEC23 - 13MAY26 a (modestly) growing UK market, enjoying decent margins and

240 cash flow. We think that its low valuation multiples owe more

TARGETTARGET 230.00230.00

220 to historical dysfunctionality than the current state of affairs.

200 CURRENTCURRENT 197.30197.30 With its outstanding job, resolving a number of existential

160 problems, the company has evolved a reliable business model.

140 However, we feel that the share price now reflects these

120 virtues, and so rate the shares Sector Perform.

15m Risks to rating and price target

10m

5m A worsening UK consumer environment leading to lower

2024 2025 2026

D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M volume growth and/or downtrading to own label brands in

PFD LN Rel. FT ALL SHARE INDEX MA 40 weeks Premier Foods’ categories would be unhelpful, as would a

Source: Bloomberg and RBC Capital Markets estimates for Target deterioration in the funding position of Premier’s pension

Valuation schemes such that it would not be possible to transfer them

We believe that consumer staples stocks lend themselves to an insurer in 2026 as intended.

to a DCF valuation methodology owing to the relative

Premier has made three acquisitions recently: Merchantstrength and predictability of their cash flow together with

Gourmet, The Spice Tailor and FUEL10K. Disappointing—in some instances—a significant mismatch between capital

performance by these acquisitions would have an adverseexpenditure and depreciation charged through the profit