United Natural Foods' Nice Price

United Natural Foods Inc. (UNFI - Analyst Report) continues to experience broad-based revenue growth and stable-to-improving operating margins ex one-time items. Benefiting from the positive trends in the natural foods industry and improved distribution capacity, the company is expected to continue to grow in terms of sales. The near-term earnings dilution from the Millbrook acquisition has created a valuation-based buying opportunity.

United Natural Foods possesses significant growth potential as the leading domestic distributor of natural and organic products in the growing natural products sector. Key relationships with leading natural product retailers strengthen the company's competitive position. Investments in people, facilities, equipment, and new technologies are also enhancing its competitive position. United Natural Foods is well positioned to deliver consistent double-digit top line growth in fiscal 2008.

United Natural Foods stock has traded in a wide P/E (Price-Earnings Ratio) multiple range of 15 to 38 over the last five years, except in times of earning disappointments. During times of earnings instability, the stock has been supported at the 0.15 level on a price-to-sales basis, which currently equates to $11.78 per share.

The company's leading market position in the fast growth natural and organics product market, along with the recent distribution contract extension with Whole Foods Market (WFMI - Snapshot Report), should continue driving both sales and earnings growth. The management's efforts to improve efficiencies and to reduce operating costs, especially by building cost effective infrastructure, should promote margin expansion. The target price of $30.50 is based on a 25 P/E on trailing 12 month earnings.

Read the full analyst report on UNFI

Read the full analyst report on WFMI