Premier Foods – tomorrow’s AGM Update should read well and show just how cheap its shares are at 199p, offering 25% upside

Mark Watson-Mitchell - 15.07.2026

Just ahead of Premier Foods (LON:PFD) holding its AGM tomorrow, Thursday, 16th July, I look forward to one of the UK’s biggest food groups issuing a positive First Quarter Trading Update.

Capitalised at £1.73bn, I believe this substantial sector leader is significantly undervalued at just 12.7 times estimated earnings.

In my view, barring any unforeseen circumstances, with the shares at 199p, there is at least a 25% upside being offered today.

The Business

As one of Britain's largest food producers, Premier Foods employs over 4,000 people operating from 13 locations across the country, supplying a range of retail, wholesale, foodservice and other customers with its iconic brands which feature in millions of homes every day.

It is the home to some of the nation's best-loved brands, including Ambrosia, Batchelors, Bisto, Loyd Grossman, Mr Kipling, Oxo and Sharwood's.

More recently, it expanded its portfolio of leading brands through acquisitions including The Spice Tailor, FUEL10K and Merchant Gourmet.

2026 Final Results

On Thursday, 14th May, the group reported preliminary results for the 52 weeks to 28th March, showing strong earnings growth ahead of expectations and a further dividend increase.

Headline revenue rose by 2.5% to £1,175.2m, with branded revenue up 3.4% to £1,041.7m.

Trading profit increased by 6.7% to £200.4m, and adjusted profit before taxation grew by 8.5% to £183.6m, resulting in adjusted earnings per share of 15.8p, an 8.7% increase.

The company also saw a significant reduction in net debt by £48.4m to £95.2m, and the final dividend per share was increased by 20% to 3.36p.

Management Comment

CEO Alex Whitehouse stated that:

"Our continued focus on delivering profitable branded revenue growth has resulted in another year of strong earnings progression with full year Trading profit increasing to more than £200m.

This profit delivery is ahead of previously raised guidance and reflects further branded revenue growth and market share gains, in addition to efficiency benefits from our capital investment programme.

Our innovation programme has been particularly strong this year and has been a key driver of growth in our UK core branded business.

New product ranges such as Mr Kipling cake bites tubs, OXO bone broth and Angel Delight bubble jelly have been extremely successful, and yet again demonstrate the strength of our Branded Growth Model.

We are particularly pleased with the impact our new ranges have had within our Sweet Treats business, where we have seen branded revenue growth of over 7% this year.

Boosted by these innovations, this has been Mr Kipling's biggest ever year.

We've also continued to invest in the business; our capital infrastructure investment has increased further this year, as we drive automation, increase efficiencies, and lay the platform for further growth.

Revenue from our entries into new categories grew 37% this year; the launch of FUEL10K yoghurt & granola being a major highlight, and while our overseas business was impacted by a reduction of retailer stock levels of cake in Australia, we made strong progress in Europe and North America.

During the year, we also added the Merchant Gourmet brand to our portfolio, as we continue to deliver on our strategy of acquiring brands with strong future growth potential.

All three of our acquired brands grew revenues double-digits this year and we see further opportunities for them, in the UK and overseas.

Additionally, and even after the Merchant Gourmet acquisition, our financial leverage reduced to 0.4x Net debt/Adjusted EBITDA.

In line with our progressive approach to dividends, we're increasing the final dividend by 20%, which is again well ahead of adjusted earnings growth.

Given the continued strong performance of the Group and the cash generating capacity of the business, we also currently plan to introduce an interim dividend in FY26/27.

As we look forward to FY26/27, our expectations are unchanged and we expect to make further strong progress across all our strategic pillars."

The Equity

There are some 869m shares in issue.

The group’s biggest shareholder is Nissin Foods Holdings (25.04%).

Other larger holders include Van Lanschot Kempen Investment Management (6.96%), M&G Investment Management (6.17%), JPMorgan Asset Management (UK) (5.07%), Brandes Investment Partners (4.86%), Dimensional Fund Advisors (3.37%), Paulson & Co. (2.94% ), BlackRock Investment Management (UK) (2.92%), Vanguard Capital Management (2.23%), and Polar Capital (1.86%).

Broker Views

Analysts Clive Black and Darren Shirley, at Shore Capital Markets, currently have estimates out for the year to end-March 2027, looking for revenues of £1,226m (£1,176m) with adjusted pre-tax profits of £184.5m (£183.6m), creating unchanged earnings of 15.7p, while anticipating a higher dividend of 4.5p (3.4p) per share, with the group halving its net debt to £48.0m (£95.0m).

For 2028, they see £1,273m sales, £194.1m profits, earnings of 16.5p and a 5.4p dividend, while transferring into net cash of £39.0m by the year-end.

In their estimates for 2029, the analysts go for £1,321m revenue, £204.2m profits 17.4p earnings, a 6.5p per share dividend and a massive £120.0m net cash position.

The analysts state that:

“We see this highly successful proprietary branded British food manufacturer as being fundamentally undervalued (250p would be a fairer base) with considerable scope for medium-to-long term ongoing rating expansion.”

My View

The above analysts are totally right, in my view, that Premier Foods deserves a far better rating than it is now standing on; with its shares at just 199p, they are on a mere 12.7 times price-to-earnings ratio.

That should be at least 16 times, the market average, giving them that 250p price tag.

(Profile 29.06.20 @ 67.5p set a Target Price of 101p*) 

(Profile 01.11.23 @ 117.5p set a Target Price of 152.75p*) 

Its products are on our shelves