Actions of United Natural Foods (NYSE: UNFI) were scrapped today after the supplier of choice for retailers like Whole Foods posted disappointing results in its fiscal third-quarter earnings report.
As a result, the stock was down 12.2% as of 11:12 a.m. ET.
Did Nvidia miss out in 2009? This rare signal flashes again. In 2009, a “double down” signal appeared for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company that is 1/100th the size of Nvidia. Continue “
What happened to United Natural Foods?
Revenue from wholesale shares fell 4.2% to $7.7 billion, although 450 basis points (4.5 percentage points) of that drop were due to optimization actions, including the closure of a distribution center in Allentown, Pennsylvania, as the company rationalizes its business to focus on more profitable channels and customers.
However, that figure was below estimates of $7.8 billion.
Overall, the company continued to make improvements, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increasing 16.6% to $183 million. Meanwhile, adjusted earnings per share rose to $0.77 from $0.44, matching estimates.
CEO Sandy Douglas said: “Through the disciplined execution of our value creation strategy, we achieved underlying sales growth, improved profitability and strong free cash flow.”
The liquidation appears to be due to loss of revenue, but that is understandable given the business’s focus on profitability.
What’s next for UNFI?
With one quarter left in the fiscal year, management lowered its guidance, calling for full-year revenue of $31.1 billion to $31.3 billion, compared with a previous range of $31.0 billion to $31.4 billion, and adjusted earnings per share of $2.40-$2.60, compared to a previous range of $2.30-$2.70.
Douglas’ strategy has paid off, as UNFI has become a healthier, more profitable business under his watch, and its stock has doubled in the last year. The stock may be fairly valued now with a forward P/E of around 18, but it has room to rise if margins continue to improve.
Should You Buy United Natural Foods Stock Right Now?
Before you buy United Natural Foods stock, consider this:
He Varied and Dumb Stock Advisor The analyst team has just identified what they believe are the 10 best stocks for investors to buy now… and United Natural Foods was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you would have $445,672!* Or when NVIDIA made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $1,280,566!*