PRGO

Perrigo is a beaten-down deep-value situation, not a quality compounder. At $10.05 the equity trades at just 0.3x FY2025 revenue of $4.25B — optically cheap — and the business still throws off cash, with $239M of operating cash flow against $93.4M of capex (~$146M free cash flow). For a diversified OTC self-care portfolio where 'no one product represents more than 5% of total revenue' (MD&A), spanning store brands plus brands like Opill, ellaOne, Compeed and ACO, a low price-to-sales multiple is the bull case. The problem is that the discount is on the equity, not the enterprise: with $3.60B long-term debt and only $532M cash, the debt-adjusted valuation is far less compelling, and the leverage (liabilities/equity 1.91x) leaves little margin for error.

The fundamentals are genuinely deteriorating, and the filing language confirms a business that needs fixing rather than one that is humming. Revenue has fallen three years running (from $4.66B in FY2023 to $4.25B in FY2025, -2.8% YoY), and the company has now posted net losses in all five years 2021–2025 — culminating in a $1.43B FY2025 loss (EPS -$10.29) and a -$1.12B operating loss that imply a large impairment, since D&A was only $338M. Retained earnings sit at -$3.68B and equity fell 32% in a year. The MD&A's own 'Three-S' framing — Stabilizing the Americas store-brand and infant-formula businesses, Streamlining the portfolio and operating model — is the language of a company trying to arrest decline, not one growing. Margins reflect it: 35.1% gross, but -26.4% operating and -33.5% net.