Why Investors Are Not Hungry for United Natural Foods

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When United Natural Foods Inc. (NASDAQ: UNFI) reported its most recent quarterly results after the markets closed on Thursday, the company said that it had $0.76 in earnings per share (EPS) and $2.59 billion in revenue. Consensus estimates had called for $0.85 in EPS and revenue of $2.61 billion, and the fiscal fourth quarter of last year reportedly had EPS of $0.72 and $2.34 billion in revenue.

Overall, the bottom line in this latest quarter missed estimates as a result of higher than anticipated freight costs and the impact of customer mix shift. However, the improvement in working capital resulted in record free cash flow of $149.7 million for the quarter.

In terms of its segments, the company reported as follows:

  • Supernatural net sales grew 27.5% year over year to $982 million.
  • Independents net sales increased 5.7% to $651 million.
  • Supermarkets net sales increased 1.1% to $707 million.
  • Other net sales decreased 1.5% to $252 million.

Looking ahead to the 2019 fiscal full year, the company expects to see EPS in the range of $3.48 to $3.58 and net sales between $11.1 billion and $11.3 billion. Consensus estimates call for $3.54 in EPS and $11.05 billion in revenue.

Steven L. Spinner, board chair and chief executive, commented:

We are on track to close the SUPERVALU transaction in the fourth quarter of calendar 2018, and our teams are hard at work planning for the integration to capture the significant synergies and strategic benefits of this transformative combination, positioning our company for growth and value creation.

Shares of United Natural Foods closed Thursday at $33.85, with a consensus analyst price target of $43.29 and a 52-week range of $31.84 to $52.69. Following the announcement, the stock was down 11% at $30.10 in early trading indications Friday.