What to Expect Performance Food Group Stock This Week

The stock has a history of muted post-earnings reactions

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Performance Food Group Company (NYSE:PFGC) is a customer-centric food service distribution company in the United States. The company announced will be releasing third quarter earnings results on Wednesday, May 5 before market hours. Ahead of the event, we're going to dig into the stock's long and short-term viability. 

Performance Food Group has managed to beat earnings expectations on three out of the last four earnings reports. However, that's only resulted in one positive post-earnings move, a 4.1% gain back in February. In the last eight reports, PFGC has averaged a post-earnings move of 2.9%, regardless of direction. This time around, the options market is pricing in a slightly larger-than-usual move of 3.9%.  

Year-over-year, PFGC has doubled in value, culminating in a March 15 record high of $59.89. Since the, the shares have consolidated below $60, with their ascending 50-day moving average containing any sharper pullbacks in recent months.

PFGC Chart

There may yet be room for the stock to continue running. From a value perspective, Performance Food Group stock is shaping up to be a promising turnaround play due to its amazing revenue growth. In fiscal 2020, PFGC increased revenues by 27% to $25 billion from $19.7 billion in fiscal 2019, and have grown their top line by 50% since fiscal 2017. Furthermore, PFGC has already bumped its trailing 12 month revenue to $26.67 billion with the addition of the last two quarters, marking a 6% increase.

Where things get shaky for Performance Food Group is on the bottom line. In fiscal 2020, PFGC had $114 million in net losses, which has now extended to -$174.5 million over the past four quarters. In total, Performance Food Group's net income has decrease by $373.2 million since fiscal 2018.

However, the contrast between the company’s growing revenues and its declining net income is precisely what makes PFGC such an interesting turnaround play. Although there is a lot of risk involved when investing in a company with a downward net profit trajectory, the reward potential for Performance Food Group stock could be huge if the company can begin generating profits.

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