Premium Brands Holdings Corporation (TSX: PBH) has a long history of specialty food manufacturing and food distribution. Over the last few years, Premium Brands’ (PBH) stock price has faltered and is now trading at 52-week lows. And it’s yielding a very generous 4.8%.
Let’s take a look at why I think now is a good time to buy.
Defensive business at a cheap valuation
Despite the fact that Premium Brands is a defensive company, its stock price has been hit hard over the last five years. In fact, it’s down 48% during this time period. This was the result of changing consumer preferences, a high debt level, and eroding margins. As a result, the company adjusted its 2026 guidance lower. But management still expects momentum in the coming years as it has exited slower growth segments in favour of higher growth ones.
And PBH stock has a few things going for it. For example, its valuation is low – 13 times this year’s earnings estimate. On top of this, earnings growth is accelerating. This year’s estimate implies an earnings growth rate of 20% after years of little earnings growth.
This has triggered share buybacks and insider buying, both reflecting management’s view that PBH’s stock price is unjustifiably low and that management has faith in the company’s future.
New focus for Premium Brands
The food business is a defensive business. This fact did not save Premium Brands from turmoil over the last five years, but it is a big selling point going forward. The company has learned from the last five years, and it is now better positioned to move forward in a healthier way.
The food business is shifting – there’s a new food order. Cleaner, healthier, and more nutrient-dense foods. Demand for core product categories of premium food such as artisanal breads, frozen packaged sandwiches and wraps is seeing strong demand. At the same time, traditional highly processed foods are seeing contracting demand.
In response, Premium Brands began a capital spending cycle that emphasized this shift, transforming its manufacturing footprint and ability to serve the U.S. market. While this has been met with investor skepticism, the results thus far are good.
Premium Brands Q2 results
Second-quarter results showed momentum in revenue, cash flow, margins, and debt reduction. For example, revenue hit a record $2.4 billion, a 26% increase over the same period last year. This was primarily driven by acquisitions, as well as organic growth and selling price increases.
Looking ahead, Premium Brands expects to continue to drive increasing free cash flows, margins, and returns on capital employed, as new production capacity is leveraged to drive sales and earnings growth.
Additionally, balance sheet improvements are also expected to continue. In fact, the company expects to achieve a total debt-to-EBITDA ratio of 3 times or better by mid-2027. This compared to a ratio of 4.6 times in the first quarter of 2025.
The bottom line
Premium Brands stock is a defensive and cheap way to gain access to a generous dividend yield of 4.8%. PBH stock is trading at 52-week lows today, and I expect that this will not last long. I would start building a position in this defensive stock. And I would add to it if it goes even lower. This looks like a solid opportunity that’s due for a rebound.