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Category: Stock Market and United Natural Foods
Date: 11 June 2020 Stock Price: $17.90 We take a look at the full 3rd quarter earnings report of their 2020 fiscal year of United Natural Foods a premier food wholesaler delivering a wide variety of products to customers across North America.
UNFI's ability to successfully manage the strong increase in customer demand driven by the COVID-19 pandemic is a testament to the dedication of our associates, our strong industry position, and the critical role we play in the North American food supply chain" |
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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.
Overview of United Natural Foods' 3rd quarter 2020 earnings report
- Net sales: $6.668 billion (up from $5.963 billion for the same quarter of the previous year)
- Revenue increased by 2% over the last 12 months
- Cost of sales: $5.811 billion (up from $5.174 billion for the same quarter of the previous year)
- Cost of sales increased by 12.3% over the last 12 months
- Cost of sales increased by 12.3% over the last 12 months
- Net income: $88 million (up from $57 million for the same quarter of the previous year)
- Net income increased by 54% over the last 12 months
- Diluted earnings per share: $1.60 (up from $1.12 for the same quarter of the previous year)
- Diluted earnings per share increased by 43% over the last 12 months
- Diluted weighted-average shares outstanding: 55.217 million (up from 50.964 million for the same quarter of the previous year)
- Cash and cash equivalents: $56.425 million
- Cash and cash equivalents per share: $1.03
- Cash and equivalents makes up 5.7% of United Natural Foods market capital
- Cash and equivalents makes up 0.7% of United Natural Foods total assets
- Inventories of United Natural Foods: $2.025 billion
- Inventories makes up 26.3% of United Natural Foods total assets
- Stockholders equity in United Natural Foods: $1.167 billion
- Stockholders equity per share: $21.13
- So United Natural Foods is trading at 0.84 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
- For some perspective the average price to book of firms in the S&P500 is 3.7
United Natural Foods' management commentary on their 3rd quarter 2020 earnings
PROVIDENCE, R.I., June 10, 2020 /PRNewswire/ -- United Natural Foods, Inc. (NYSE: UNFI) (the "Company" or "UNFI") today reported financial results for the third quarter of fiscal 2020 (13 weeks) ended May 2, 2020.
"UNFI's ability to successfully manage the strong increase in customer demand driven by the COVID-19 pandemic is a testament to the dedication of our associates, our strong industry position, and the critical role we play in the North American food supply chain," said Steven L. Spinner, Chairman and Chief Executive Officer. "We expect elevated consumer demand for our wide variety of natural, conventional and fresh perimeter products, along with our ongoing synergy and integration initiatives, to result in a strong finish to the fiscal year. I am so proud of our team of front line associates who continue to amaze us with their commitment to excellence. Our first priority will continue to be their safety."
"UNFI's ability to successfully manage the strong increase in customer demand driven by the COVID-19 pandemic is a testament to the dedication of our associates, our strong industry position, and the critical role we play in the North American food supply chain," said Steven L. Spinner, Chairman and Chief Executive Officer. "We expect elevated consumer demand for our wide variety of natural, conventional and fresh perimeter products, along with our ongoing synergy and integration initiatives, to result in a strong finish to the fiscal year. I am so proud of our team of front line associates who continue to amaze us with their commitment to excellence. Our first priority will continue to be their safety."
Fiscal 2020 Outlook
On May 12, 2020 UNFI withdrew its previous fiscal 2020 full year guidance based on the strength of its fiscal 2020 year-to-date financial performance. The following table presents the Company's updated outlook for fiscal 2020. The Company now expects to continue to operate its Cub Foods banner and certain of its Shoppers Food Warehouse stores for up to 24 months. Accordingly, the Company is also presenting its guidance reflecting the impact of moving Cub Foods and certain Shoppers Food Warehouse stores into continuing operations, consistent with how it expects to report its fourth quarter and full-year 2020 results. The outlook for Net Loss and Loss Per Share includes the $425 million pre-tax, or $7.95 per share, non-cash Goodwill and asset impairment charges incurred in the first quarter.
Previous full year outlook Current full year outlook
On May 12, 2020 UNFI withdrew its previous fiscal 2020 full year guidance based on the strength of its fiscal 2020 year-to-date financial performance. The following table presents the Company's updated outlook for fiscal 2020. The Company now expects to continue to operate its Cub Foods banner and certain of its Shoppers Food Warehouse stores for up to 24 months. Accordingly, the Company is also presenting its guidance reflecting the impact of moving Cub Foods and certain Shoppers Food Warehouse stores into continuing operations, consistent with how it expects to report its fourth quarter and full-year 2020 results. The outlook for Net Loss and Loss Per Share includes the $425 million pre-tax, or $7.95 per share, non-cash Goodwill and asset impairment charges incurred in the first quarter.
Previous full year outlook Current full year outlook
- Net Sales($ in billions) : $23.5 -$24.3 $26.4 - $26.6
- Net Loss ($ in millions) : $(395) - $(363) $(317) - $(305)
- Loss Per Share (EPS): $(7.39) - $(6.79) $(5.85) - $(5.65)
- Adjusted Earnings Per Diluted Share (EPS): $0.85 - $1.45 $2.30 - $2.50
- Adjusted EBITDA(5) ($ in millions): $520 - $560 $655 - $670
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 $62.70 and it is currently trading at $17.90 a stock. So over a 5 year period the stock of United Natural Foods declined by -71.4% .
The stock of United Natural Foods trading at closer to its 52 week high of $23.38 than it is to its 52 week low of $5, which to us is a clear indication that the short term sentiment and momentum towards United Natural Foods' stock is positive at this point in time.
The stock of United Natural Foods trading at closer to its 52 week high of $23.38 than it is to its 52 week low of $5, which to us is a clear indication that the short term sentiment and momentum towards United Natural Foods' stock is positive at this point in time.
United Natural Foods (NYSE: UNFI) stock price history over the last 5 years
Recent google search trends for UNFI stock price
The graphic below shows the trend in google searches for UNFI stock price over the last 12 months in the United States as obtained from Google Trends. And as it shows there is a fair bit of interest in the stock price of UNFI, all be it a little erractic.
Recent coverage of United Natural Foods
The extract below covers some of the most recent stock price movements of United Natural Foods as obtained from Fool.com
What happened
Shares of United Natural Foods (NASDAQ:UNFI) tumbled today after an otherwise strong earnings report wasn't enough to justify the stock's monster gains during the pandemic (shares were up nearly 200% before today's sell-off). The pullback may have also been a sell-the-news event as the supermarket operator had reported similar numbers in a preliminary earnings report back in May.
As of 1:52 p.m. EDT today, the stock was down 19.4%.
So what
United Natural Foods, which owns a number of supermarket banners it acquired from SuperValu, as well as a natural foods wholesale business, said that revenue in the third quarter increased 12% to $6.67 billion, in line with estimates. Its business supplying Whole Foods in the quarter was particularly strong, with sales rising 16.1% to $1.28 billion, while its core supermarkets segment saw revenue increase 15.3% to $4.27 billion. Like other supermarket operators, United Natural Foods benefited from a surge in demand during the lockdown, which led to strong operating leverage, driving profit growth. Adjusted operating income in the quarter increased from $50.9 million to $82.2 million, while adjusted earnings per share jumped from $0.61 to $1.40, even with the company's forecast in its update in May.
CEO Steven Spinner touted the company's momentum going into the fourth quarter, saying, "We expect elevated consumer demand for our wide variety of natural, conventional and fresh perimeter products, along with our ongoing synergy and integration initiatives, to result in a strong finish to the fiscal year."
Read the full article here
What happened
Shares of United Natural Foods (NASDAQ:UNFI) tumbled today after an otherwise strong earnings report wasn't enough to justify the stock's monster gains during the pandemic (shares were up nearly 200% before today's sell-off). The pullback may have also been a sell-the-news event as the supermarket operator had reported similar numbers in a preliminary earnings report back in May.
As of 1:52 p.m. EDT today, the stock was down 19.4%.
So what
United Natural Foods, which owns a number of supermarket banners it acquired from SuperValu, as well as a natural foods wholesale business, said that revenue in the third quarter increased 12% to $6.67 billion, in line with estimates. Its business supplying Whole Foods in the quarter was particularly strong, with sales rising 16.1% to $1.28 billion, while its core supermarkets segment saw revenue increase 15.3% to $4.27 billion. Like other supermarket operators, United Natural Foods benefited from a surge in demand during the lockdown, which led to strong operating leverage, driving profit growth. Adjusted operating income in the quarter increased from $50.9 million to $82.2 million, while adjusted earnings per share jumped from $0.61 to $1.40, even with the company's forecast in its update in May.
CEO Steven Spinner touted the company's momentum going into the fourth quarter, saying, "We expect elevated consumer demand for our wide variety of natural, conventional and fresh perimeter products, along with our ongoing synergy and integration initiatives, to result in a strong finish to the fiscal year."
Read the full article here
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 $25.90 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 $25.90. So a good entry point into United Natural Foods stock would be at $23.30 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 $25.90. So a good entry point into United Natural Foods stock would be at $23.30 or below. Since the stock is trading at well below these levels we rate the stock of United Natural Foods as a buy.
Next earnings release of United Natural Foods
It is expected that United Natural Foods will release their 4th quarter and full fiscal 2020 results towards mid September 2020