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Upbeat Guidance Sends United Natural Foods Soaring 28% Higher

By Daniel Miller - Updated Apr 19, 2019 at 6:58PM

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Here are the details from United Natural Foods' investor day that sent the stock soaring Wednesday.

What happened?

Shares of United Natural Foods Inc. (UNFI 1.85%), a premier food wholesaler of natural, organic, and specialty foods and nonfood products across North America, jumped 28% Wednesday after delivering upbeat guidance during its investor day presentation.

Check out the latest United Natural Foods earnings call transcript.

So what

Excluding one-time items, United Natural Foods expects fiscal 2019 adjusted earnings per share of between $1.69 to $1.89, higher than analysts' estimates calling for $1.60 per share. Net sales are expected to check in between $21.5 billion to $22 billion, slightly higher than analysts' estimates of $21.35 billion. Lastly, adjusted EBITDA is expected to range between $650 million to $665 million, again ahead of estimates calling for $636 million. 

Aisle of fruits and vegetables at a grocery store

Image source: Getty Images.

Now what

The upbeat guidance is a welcome change of pace for investors who have watched the stock plunge multiple times over the past year.

UNFI Chart

UNFI data by YCharts.

Now that the stock has shed much of its value and is currently trading at a price-to-earnings ratio of 6.5 times, any business improvement from the company could fuel the stock higher. The upbeat guidance doesn't completely resolve recent quarters plagued by profitability concerns and higher labor costs, but it does suggest that its operations will take a step forward during fiscal 2019. Management's focus over the next three years will be to successfully integrate Supervalu and drive cost synergies of more than $185 million by fiscal 2022, optimize its distribution network, drive cross-selling, and generate cash to pay down debt. If management can execute those strategies and drive adjusted EBITDA up 7% annually by 2022, as it anticipates, the next few years should be much more rewarding for shareholders. 

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United Natural Foods, Inc. Stock Quote
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