Performance Food Group (PFGC) Q4 FY2026: The Mix Shift Worked, The Shareholder Didn’t

Performance Food Group Company (PFGC) Q4 FY2026 — Q4 FY2026 (quarter ended June 27, 2026): net sales $18,028.9M, up 6.4% and about $80M light. Adjusted diluted EPS $1.59 vs a $1.60 bar, up 2.6%. GAAP diluted EPS $1.03, up 22.6%. Adjusted EBITDA $587.5M, up 7.4%. FY26 free cash flow $1,029.6M. Stock -8.32% across the two sessions after the print, to $104.48. PFG sold 3.5% more cases, turned them into 8.3% more gross profit, and grew adjusted EPS 2.6%. For the full year: adjusted EBITDA +9.2%, adjusted EPS +1.6%. The mix shift into independent restaurants is real and it is working. Almost none of it reached the owner, because depreciation rose 19.0% and interest 15.4% - together +17.4% against EBITDA growth of 9.2%. THE CALL: AVOID (3/5, EBITDA GREW 9.2%, ADJUSTED EPS GREW 1.6%) — base-case value ~$82.0 vs ~$104.48 today. KEY METRICS: - CALL: AVOID, 3/5. Fair value ~$82 against the $104.48 close on August 13, about 22% below. Wall Street is 23 buy, 2 hold, 0 sell, with targets averaging $132 over the last 30 days (2 targets), $129.75 over the quarter and $120.07 over the year. We differ on method, not facts: the Street prices PFG off EBITDA, we price the cash left after depreciation and interest. Bull $119, bear $53. - THE QUARTER: net sales $18,028.9M, +6.4%, about $80M under the $18,109M consensus. Gross profit $2,168.8M, +8.3%, margin +21bp to 12.03%. Operating expenses $1,845.0M, +6.4%. Adjusted EBITDA $587.5M, +7.4%. GAAP net income $162.3M, +23.4%. Adjusted diluted EPS $1.59 vs a $1.60 bar, +2.6%; GAAP diluted EPS $1.03, +22.6%. Total cases +3.5%, organic +1.8%, independent +8.0%, organic independent +5.8%. Product cost inflation 4.7%. - THE EPS BASIS, PROVEN NOT ASSUMED: the four FY2026 adjusted quarters of $1.18, $0.98, $0.80 and $1.59 sum to the reported full-year $4.55. The GAAP quarters $0.60, $0.39, $0.27 and $1.03 sum to the reported $2.29. Both the actual and the $1.60 estimate sit on the adjusted basis, so the one-cent shortfall is genuinely like-for-like. The $0.56 bridge is amortisation $0.45, LIFO $0.19, stock comp $0.08, deal costs $0.04, other $0.01, less tax $0.21. No discontinued operations. - WHERE THE LEVERAGE WENT: company gross profit per case +4.6% against operating expense per case +2.8% - real leverage. But in Foodservice, the segment that owns the independent franchise, gross profit per case grew 3.6% against cost per case of 5.6%, and segment adjusted EBITDA rose just 2.2% to $395.5M. Convenience, the nicotine business nobody underwrites, delivered +10.4% to $132.5M. Specialty fell 0.5% to $92.7M. - THE LINE BELOW EBITDA: FY2026 depreciation $541.9M, +19.0%; interest expense $413.7M, +15.4%; the two together $955.6M, +17.4%, against adjusted EBITDA growth of 9.2%. Capex fell 24% to $384.1M while finance-lease obligations grew $200.8M net to $1,802.6M and $241.6M of lease principal was repaid through financing. Free cash flow of $1,029.6M vs $704.1M becomes $778.4M of owner earnings, $726.1M once $52.3M of one-off tax refunds is stripped. What to watch: UP: a quarter in which Foodservice operating expense grows more slowly than Foodservice gross profit - the release prints both figures every quarter, one paragraph apart. DOWN: FY2027 sales landing inside the guide while adjusted EPS again lags EBITDA, which would confirm the depreciation-and-interest drag is structural rather than a Cheney Brothers hangover. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.