One to watch: Premium Brands Holding, Wesdome and GDI

Premium Brands Holdings reported a profit of $6.3 million in the first quarter, compared with $5.9 million in the same period last year. (Photo: 123RF)

What to do with Premium Brands Holding, Wesdome and GDI titles? Here are some analyst recommendations that are likely to change prices soon. Note: the author may have a completely different opinion than the one expressed by the analysts.

Premium Brands Holding (PBH, $92.35): a promising year ahead

All of Premium Brands Holding’s tokens appear to be well positioned to achieve the goals it has set, confirms Desjardins Securities’ Chris Li after consulting Q1 results.

To (re)read: Premium Brands reports $6.3 million in Q1 earnings

If its earnings before interest, taxes, depreciation and amortization (EBITDA) margin is better than analyst estimates, that’s due to both better performance on its specialty foods side and premium food distribution.

Internal growth in its first division was in the order of 5.6%, rather than 3%, as Americans’ appetites for meat, sandwiches and pastries increased, as did Canadians. Its domestic sales rose 1.1% after falling 4.3% in the previous quarter.

Although the Richmond, British Columbia-based company has seen a decline in interest in some of its products, the organization’s leadership doesn’t seem to be paying much attention, according to an analyst. Convenience stores and fast food chains are looking for innovative products and ways to reduce the need for labor. His food will satisfy the demand.

If its EBITDA margin increased by 60 basis points compared to the same period last year, it is also because its raw material costs have fallen. In addition, adds Chris Li, his sales prices have increased, his production has become more efficient thanks to the automation of his equipment, and there is some stability in his workforce.

However, consumer interest in lower-priced products hurt the performance of its higher-end food distribution division in the first quarter, with organic growth coming in at -5.3% instead of the 4.0% analyst expected. However, it contributed to a 40 basis point increase in the profit margin. Rather, he thought it would weigh him down 120 basis points.

In the next quarter, management does not expect demand in this area to increase significantly, says the analyst. However, the trend should reverse in the second half of the quarter.

Management also expects its leverage to decline by the end of the year. It should go from a debt of 4.3x its EBITDA to a multiple of 3.5x to 4x, especially as its EBITDA value should rise. It now expects adjusted EBITDA of $622 million, not $615 million.

The analyst also expects mergers and acquisitions.

It is also revising its target price upwards, from $105 to $106, as it slightly revised its 2025 EBITDA expectations.

Wesdome (WDO, $11.06): analyst raises his expectations

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