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Will Acquisitions Aid United Natural's (UNFI) Q1 Earnings?

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United Natural Foods, Inc. (UNFI - Free Report) is slated to release first-quarter fiscal 2018 results on Dec 7, after the market closes.

The distributor of natural, organic and specialty food and non-food products has a mixed record of bottom-line surprises in the trailing four quarters. Considering this, let’s delve into how things are shaping up for the upcoming announcement.

What to Expect?

The Zacks Consensus Estimate for the first quarter is currently pegged at 59 cents per share and has been stable over the past 30 days. Estimated earnings depict a growth of 1.7% from the prior-year reported figure.

Further, analysts polled by Zacks expect revenues of $2,389 million for the quarter under review, up 4.9% growth from the year-ago quarter.

United Natural Foods, Inc. Price, Consensus and EPS Surprise

Factors at Play

Acquisitions have been favoring United Natural‘s growth for a while. The buyouts of Haddon House and Gourmet Guru boosted the company’s top line in the previous quarter. Such takeovers have enabled United Natural to expand resource strength and achieve greater operating scale. Synergies resulting from the integration of the company buyouts are expected to benefit performance in the first quarter as well. Additionally, the company’s top line has been gaining from rising demand for natural and organic products.

Further, the company is likely to gain from restructuring initiatives, aimed at enhancing operating efficiency. Such efforts include reduction of employee severance costs, stemming from the integration of acquired businesses. Moreover, in order to allocate resources more diligently, the company has been exiting less profitable businesses. Such actions are expected to positively impact the company’s bottom line.

However, we remain concerned regarding the grocery industry headwinds that may affect United Natural’s performance. Companies such as ConAgra Foods (CAG - Free Report) and Kellogg (K - Free Report) have been facing stiff competition, due to the growing dominance of industry biggies such as Amazon.com (AMZN - Free Report) . Tight margins and an aggressive promotional environment also continue to pose as headwinds. Nevertheless, we expect the aforementioned growth drivers to cushion the company from these obstacles and aid growth.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that United Natural is likely to beat earnings estimates this quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although United Natural carries a Zacks Rank #2, its Earnings ESP of 0.00% makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

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