Premium Brands Holdings Corp

Premium Brands Holdings Corp (TSX: PBH) is engaged in specialty food manufacturing and premium food distribution and wholesale businesses with operations across Canada and the United States. It offers its products and services under various brands.

Key highlights

• In Q2 2021, the Company failed on maintaining its pace and witnessed lower performance across operating matrix against an industry, which exhibits the pressure on company.
• The company increased its long-term debt to CAD 780.8 million from CAD 525.6 million in Dec 26, 2020. The debt-to-equity ratio at the end of the June 2021 stood at 1.11x higher than the industry median of 0.51x. This implies higher balance sheet risks.
• PBH shares are available at an NTM EV/EBITDA multiple of 14.7x compared to the industry (Consumer Non-Cyclicals) median of 10.8x. This implies that the shares are overvalued against the industry. The company is overvalued against the industry on many multiples.
• Recently, the stock witnessed a healthy rally on the weekly price chart and has moved close to the upper band of the Bollinger band, indicating the stock is perhaps overbought and due for a price correction or a consolidation.

Technical Price Chart, Source: REFINITIV, Analysis by Kalkine

Stock recommendation

Although the company posted robust financial numbers in Q2 2021, but its liquidity profile is weak, with increased debt, which is not a good indication. Additionally, the stock is trading on the stretched valuations along lower performance across operating matrix against an industry. Therefore, based on the above rationale, we recommend a “Watch” rating on the stock at the closing price of CAD 130.40 on August 16, 2021. 

Mission Ready Solutions Inc

Mission Ready Solutions Inc (TSXV: MRS) is a Canada based company engaged in providing services and products for the defense, security, and protective services agencies.

Key Highlights

• As on March 31, 2021, the Company reported working capital deficit of CAD 4.56 million.
• In Q1 2022, the company's current ratio was 0.86x, compared to the industry median of 2.18x. indicating that the company's short-term obligations are growing faster than its resources to cover them, which is not a good indication.
• In Q1 2021 the Company reported Lower gross margins and EBITDA margin V/s Industry which exhibits the pressure on company.
• The stock is trading at a higher Price to Cash Flow Multiple of 11.1x on TTM basis, against the industry (Aerospace & Defense) median of 8.4x, which suggest the valuation are stretched at current levels.
• The stock is trading far below the key support levels of the 100-day and 50-day SMAs, indicating a bearish trend.
• The stock is making lower lows and lower highs on a regular basis, indicating that it is trading in a bearish pattern with the risk of additional market consolidation or decline.

Technical Price Chart, Source: REFINITIV, Analysis by Kalkine

Stock recommendation

Considering the strong bearish technical indicators, where the stock is trading below the key support levels and making lower lows and lower highs, along with stretched valuation, negative working capital and lower than industry margins, we recommend an “Avoid” rating on the stock at the closing price of CAD 0.355 on August 16, 2021.

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.