Premier Foods Shares ‘Considerably Undervalued’ Says Shore Capital

Premier Foods (LON: PFD) delivered a resilient first-half performance despite tough year-on-year comparatives, exceptional costs and weather-related pressures, according to Shore Capital analysts Darren Shirley and Clive Black, who argue the company’s shares remain “considerably undervalued”.

In a note last week, Shore Capital said it was “pleased to see growth, albeit subdued in historic context, in revenues, trading profit, and PBT whilst net debt is lower still YoY”. 

Group revenue for the first half of FY26 rose 0.7% to £502.5 million, ahead of expectations, with branded sales up 1.9% to £453 million. 

Its Sweet Treats division performed strongly, with branded sales rising 9.4% to £115.6 million, offsetting a 0.5% decline in Branded Grocery, though the latter returned to growth in the second quarter.

Shore Capital highlighted that Premier gained market share in more than half its categories, even as non-branded sales fell 8.5% due to their tactical nature. 

International revenue dipped 0.4%, mainly reflecting reduced retailer buffer stock in Australia despite “strong in-market growth”.

Trading profit came in ahead of forecast, rising 0.4% to £70.5 million. Shore Capital noted that underlying profit would have been 7% higher without the full first-half impact of extended producer responsibility (EPR) charges. 

Adjusted pre-tax profit increased 2.2% to £62.4 million, prompting the analysts to upgrade their PBT outlook by around 2% and raise EPS forecasts by 3% to 15p.

With Premier trading on a forward price-earnings ratio of 11.5 times and an EV/EBITDA multiple of 7.2 times, Shore Capital said its equity “has been rather weak in recent times” but argued the update offered “resilience and reassurance”. 

The firm concluded: “We see Premier’s shares as considerably undervalued with a balance sheet and cash flow ammunition to be increasingly rewarding for shareholders.”