Performance Food Group stock slipped about 3% to close near US$104 after earnings, even though the latest quarter showed the kind of profit engine food distribution investors usually want to see. Net income came in at US$162.3m on US$18.0b of revenue, with adjusted EBITDA at the top end of guidance and cash generation strong.

The short term reaction reflects nerves around thin margins and an already rich P/E of 45.8x. The bigger question is whether this earnings power and free cash flow profile can support that valuation in the years ahead. The rest of the numbers matter to that debate.

Love the strong cash generation at Performance Food Group but uneasy about paying a 45.8x P/E for a thin margin distributor? Take a look at our list of…