Please ensure Javascript is enabled for purposes of website accessibility

Why US Foods Holding Corp. Stock Is Surging Today

By Matthew DiLallo – Nov 6, 2018 at 12:11PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The food-service distributor delivered the goods in the third quarter.

What happened

Shares of US Foods Holding Corp. (USFD -0.99%) rallied more than 12% by 11:15 a.m. EST on Tuesday after the food-service distribution company reported third-quarter results that were better than expected.

So what

US Foods Holding recorded $6.2 billion in sales during the third quarter, 0.8% lower than the year-ago period and $160 million below the consensus estimate. However, the company's profitability increased, with adjusted EBITDA rising 6% year over year as it continued expanding the gross profit of each case it delivers. Meanwhile, earnings came in at $0.55 per share after adjustments, which beat analysts' expectations by $0.05.

A close up of tomatoes in a wooden crate.

Image source: Getty Images.

The company noted that it expects total revenue to come in a bit below its initial forecast, with it now anticipating that sales will be flat to down 1%, versus its prior outlook for a 1% to 2% increase in sales. Driving that weakness is the expectation that its total case volume will decline 1% versus its previous forecast of flat volumes. 

However, despite the weaker sales, US Foods Holding expects earnings to come in a bit better than expected this year. The company now sees full-year EPS between $2.03 and $2.08, which is slightly better than its initial view of $2 to $2.10. Furthermore, the midpoint of its forecast is well above the $2.01 analysts anticipated.

Now what

US Food Holdings has had its share of challenges this year due to changing consumer preferences. While the company is working to overcome its sluggish sales by taking steps to boost its profitability, it's unclear if the food distributor will be able to restart its growth engine.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

US Foods Holding Corp. Stock Quote
US Foods Holding Corp.
$26.61 (-0.99%) $0.27

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.