Activist investor Alta Fox suggests Premium Brands Holdings’ shares are “undervalued”, a fix that could be addressed with an updated EBITDA target.
The Canada-headquartered food group with an appetite for acquisitions is due to report its first-quarter fiscal 2026 results on 7 May.
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Texas-based Alta Fox Capital Management, which holds a 1.51% interest in the business, said Premium Brands should broadcast “clearer messaging around 2027” expectations at that event to help add value to the share price.
Its shares have fallen 16.6% so far this year to close trading yesterday (30 April) at C$85.25 ($62.81). However, they have climbed 2.8% over the past 12 months and are up 12.5% over the last 12 months.
Alta Fox recommended Premium Brands provide a new EBITDA forecast for the 2027 financial year to give “investors a clear view of the company’s pro-forma earnings power following recent acquisitions and divestitures”.
And to “commit to a defined” target for free cash flow, capital expenditure and a plan to “improve working capital efficiency”.
The investor added in a statement: “As earnings growth translates into a meaningful free cash flow inflection, we believe Premium Brands’ valuation should re-rate significantly from its current decade-low multiples. We estimate more than 75% upside to the current share price.”
Expanding on the theme and the suggested fixes to address the undervalued share price, Alta Fox said in an accompanying note that its investor team are “firm supporters of PBH management, who have driven strong TSR [total shareholder returns] over their tenure”.
By communicating the recommended targets, Premium Brands would address the “current disconnect between share price and intrinsic value”, the investor said.
Alta Fox added as one of its ‘bottom-line’ assumptions: “As PBH provides greater clarity on FY27 earnings power and delivers on its FCF inflection, we believe the market will revert to valuing the business in line with historical EBITDA multiples, which could drive 150%+ upside in a bull case.”
Risks to Premium Brands’ growth around the current trading environment, including the potential impact from the Middle East crisis and the ongoing shortage of beef cattle in the US, were also highlighted.
“We believe PBH is recession-resilient but not recession-proof. Should consumers trade-down towards cheaper, unhealthier products, PBH’s growth can temporarily come under pressure,” Alta Fox said.
“This has been most pronounced with beef prices, which have continued to move higher in 2026. While the rate of growth moderates significantly in 2026, continued upward pressure on beef prices would serve as a margin headwind.”
Nonetheless, the investor suggested there is a buying opportunity in Premium Brands’ shares, and more so if management adopts the EBITDA and free cash flow recommendations.
“PBH’s valuation multiple has significantly compressed due to investors’ lack of conviction in EBITDA-to-FCF conversion after years of poor performance. This concern should be rectified in short order.”
