This Canadian food stock is a buy, analyst says

Desjardins Securities resumed coverage of Premium Brands Holdings (Premium Brands Holdings Stock Quote, Chart, News, Analysts, Financials TSX:PBH) on Dec. 17 following the company’s recently completed debt and equity financing tied to its acquisition of Stampede Culinary Partners, with analyst Chris Li increasing his target price to $120.00 from $110.00 and reiterating a “Buy” rating.

Li said Desjardins’ constructive view on the transaction is driven by Stampede’s position as a high-growth culinary solutions business, its differentiated and on-trend product offering, and the scope for operational and financial synergies that are expected to support earnings accretion and balance-sheet improvement.

“Our favourable view on the acquisition is predicated on Stampede’s high-growth business with a differentiated and on-trend offering; upside to synergies, especially from procurement cross-selling opportunities; immediate EPS accretion; and leverage reduction,” Li said.

On Dec. 10, Premium Brands announced it had agreed to acquire Stampede Culinary Partners for approximately US$662.5-million, or about C$920 million, funded through a combination of US$512.5-million in cash and US$150-million in equity. The deal also includes a one-time earn-out of up to US$100-million tied to certain EBITDA targets over the next two years.

Excluding the earn-out, Desjardins estimates the headline purchase multiple at roughly 9.7 times Stampede’s fiscal 2025 Adjusted EBITDA. After normalizing for elevated beef cost inflation and incorporating expected synergies, Li estimates the effective acquisition multiple falls to about 7.7 times EBITDA on an earn-out–inclusive basis.

The transaction is expected to close by the end of January 2026. Desjardins said the associated equity issuance, combined with the acquired EBITDA, should reduce Premium Brands’ leverage to approximately 3.9 times from about 4.3 times, with management targeting leverage of roughly 3.0 times by 2027.

Stampede is a U.S.-based culinary solutions and protein platform with nationwide distribution and estimated fiscal 2025 revenue of US$936-million, or roughly C$1.3-billion. Desjardins estimates the acquisition will lift Premium Brands’ consolidated revenue base by nearly 20% and meaningfully increase its exposure to higher-growth foodservice channels. Li noted that Stampede’s focus on foodservice contrasts with Premium Brands’ retail- and club-oriented portfolio, limiting customer overlap and expanding cross-selling opportunities.

“There is limited customer overlap as Stampede is focused on foodservice, whereas PBH is concentrated in retail and club,” Li said, adding that Stampede’s sous vide capabilities and available capacity should support a strong pipeline of new programs while allowing Premium Brands to broaden its product offering to existing retail customers.

Desjardins expects the acquisition to be mid-single-digit percentage accretive to earnings per share in the first year, with low-double-digit accretion once full synergies are realized.

Premium Brands is a Canadian specialty food company headquartered in Richmond, B.C., with a portfolio of branded and proprietary food products, including Grimm’s and Harvest, distributed across Canada and the U.S.

On valuation, Li said that based on pro forma 2026 estimates, Premium Brands is trading at approximately 9.6 times EBITDA, below its historical average multiple of about 11.5 times and near its cyclical trough of roughly 8.5 times. The revised $120 target price is based on Desjardins’ 2027 forecasts and assumes a valuation multiple in line with historical norms.

Li estimates that Premium Brands will generate approximately $673-million in Adjusted EBITDA on revenue of about $7.5-billion in fiscal 2025. For fiscal 2026, Desjardins projects Adjusted EBITDA to rise to roughly $774-million on revenue of about $8.2-billion, reflecting the contribution from Stampede, anticipated synergies and ongoing operational improvements.

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