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Category: Stock Market and United Natural Foods
Date: 2 October 2019 Stock Price: $11.07 We take a look at the 4th quarter earnings report of their 2019 fiscal year of United Natural Foods a premier food wholesaler delivering a wide variety of products to customers across North America. Its not good news for United Foods stockholders as the group's 2020 fiscal outlook looks very weak.
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About United Natural Foods
UNFI is North America's premier food wholesaler delivering the widest variety of products to customer locations throughout North America including natural product superstores, independent retailers, conventional supermarket chains, ecommerce retailers, and food service customers. By providing this deeper 'full-store' selection and compelling brands for every aisle, UNFI is uniquely positioned to deliver great food, more choices, and fresh thinking to customers everywhere. Combined with SUPERVALU, UNFI is the largest publicly-traded grocery distributor in America with expected annual sales of over $21 billion.
The image below shows some of United Natural Foods customer base. Kroger who we valued a few weeks ago is also one of them
The image below shows some of United Natural Foods customer base. Kroger who we valued a few weeks ago is also one of them
Overview of United Natural Foods' latest earnings report
- Net sales: $6.407 billion (up from $2.592 billion for the same quarter of the previous year
- Revenue increased by 147% over the last 12 months
- Cost of sales: $5.584 billion (up from $2.216 million for the same quarter of the previous year)
- Cost of sales increased by 151.9% over the last 12 months
- Net income: $18.987 million (down from $32.788 million for the same quarter of the previous year)
- Diluted earnings per share: $0.36 (down from $0.64 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 52.976 million (up from 50.901 million for the same quarter of the previous year)
- Cash and cash equivalents: $42.350 million
- Cash and cash equivalents per share: $0.80
- Cash and cash equivalents makes up 7.24% of United Natural Foods' market capital
- Cash and cash equivalents makes up 0.58% of United Natural Foods' total assets
- Accounts receivable: $1.065 billion
- Accounts receivable makes up 14.83% of United Natural Foods' total assets
- Inventories: $2.089 billion
- Inventories makes up 29.09% of United Natural Foods' total assets
- Stockholders equity of United Natural Foods: $1.510 billion
- Stockholders equity per share for United Natural Foods: $28.50
- So United Natural Foods is trading at 0.38 times it stockholders equity per share which is well outside the expected range of between 2 and 4 times most companies tend to trade at. Currently if the group sells all their assets, pays all liabilities and distribute the rest to stockholders investors would get $28.50 a stock, yet its currently trading at $11.07
- Cash provided by operating activities for full fiscal 2019: $284.530 million
- Cash provided by operating activities per share for full fiscal 2019: $5.37
United Natural Foods' management commentary on the results and earnings guidance
PROVIDENCE, R.I., Oct. 1, 2019 /PRNewswire/ -- United Natural Foods, Inc. (NYSE: UNFI) (the "Company" or "UNFI") today reported financial results for the fourth quarter and fiscal year ended August 3, 2019.
"This past fiscal year has been a transformational one for us as we began realizing some of the key benefits and competitive advantages from the SUPERVALU acquisition that will be the foundation of our long-term success," said Steven L. Spinner, Chairman and Chief Executive Officer. "As we begin the new fiscal year, I see tremendous focus and enthusiasm across the organization as we execute our strategy. This passion will be a tailwind as we drive to accelerate cross-selling efforts, realize new cost efficiencies, aggressively pay down debt and deliver results in the quarters to come."
The image below shows the Fiscal 2020 outlook for United Natural Foods. And its not good news for investors. Diluted earnings per share is expected to be between $0.35 -$0.89. This is comparison to diluted earnings per share of $036 for the 4th quarter. So they expect the full fiscal 2020 earnings per share to be around the same as the 4th quarter 2019 earnings.
The markets didn't like the news and reacted strongly to this in after hours trade. (see the 2nd stock price graphic below in which the stock of United Natural Foods plunged almost 19% after the release of their 4th quarter earnings.
- Fourth Quarter Net Sales Increased to $6.41 billion, or 2.8% when excluding the contribution from SUPERVALU and the additional week in the quarter compared to last year's fourth quarter
- Fourth Quarter Net income of $18.9 million
- Fourth Quarter Earnings Per Diluted Share (EPS) of $0.36; Adjusted EPS of $0.44
- Net outstanding debt decreased by $166 million since the end of the third quarter and $353 million since the end of the first quarter
"This past fiscal year has been a transformational one for us as we began realizing some of the key benefits and competitive advantages from the SUPERVALU acquisition that will be the foundation of our long-term success," said Steven L. Spinner, Chairman and Chief Executive Officer. "As we begin the new fiscal year, I see tremendous focus and enthusiasm across the organization as we execute our strategy. This passion will be a tailwind as we drive to accelerate cross-selling efforts, realize new cost efficiencies, aggressively pay down debt and deliver results in the quarters to come."
The image below shows the Fiscal 2020 outlook for United Natural Foods. And its not good news for investors. Diluted earnings per share is expected to be between $0.35 -$0.89. This is comparison to diluted earnings per share of $036 for the 4th quarter. So they expect the full fiscal 2020 earnings per share to be around the same as the 4th quarter 2019 earnings.
The markets didn't like the news and reacted strongly to this in after hours trade. (see the 2nd stock price graphic below in which the stock of United Natural Foods plunged almost 19% after the release of their 4th quarter earnings.
United Natural Foods (NYSE: UNFI) stock price history
The image below, obtained from Google, shows the stock price history of United Natural Foods (NYSE:UNFI) over the last 5 years. And it's been a horrible time for United Natural Foods stockholders. 5 years ago the stock was trading at around $61 and it is currently trading at $11.07 a stock. So over a 5 year period the stock of United Natural Foods declined by -81.8% . The stock is also trading at closer to its 52 week low of $6.75 than it is to its 52 week high of $30.30, which to us is a clear indication that the short term sentiment and momentum towards United Natural Foods' stock is very negative.
The image below shows the after market close stock price reaction of United Natural Foods after the release of their 4th quarter 2019 earning release, and its not good news for United Natural Foods stockholders.
United Natural Foods (NYSE: UNFI) latest stock valuation
So what is United Natural Foods (NYSE: UNFI) stock worth based on the release of their latest earnings report? Based on their earnings report and the fiscal guidance provided our valuation models provide a target (full value) price for United Natural Foods of $30.50 a stock. We therefore believe that the stock is undervalued.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $30.50. So a good entry point into United Natural Foods stock would be at $27.50 or below. Since the stock is trading at well below these levels we rate the stock of United Natural Foods as a buy.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $30.50. So a good entry point into United Natural Foods stock would be at $27.50 or below. Since the stock is trading at well below these levels we rate the stock of United Natural Foods as a buy.