United Natural Foods, Inc. (UNFI - Free Report) is scheduled to release fourth-quarter fiscal 2018 results on Sep 20. This renowned distributor of natural, organic and specialty food and non-food products boasts a splendid earnings surprise history and has outperformed the Zacks Consensus Estimate by an average of 13.4% in the trailing four quarters.
E-Commerce & Key Strategies to Fuel Growth
United Natural is set to continue gaining from its efforts to enhance presence in the e-commerce space, mainly through investments in technology and infrastructure. To this end, the company has successfully extended its online operations to its fourth fulfillment center. These centers enable United Natural to offer a wide array of online services for fulfilling the requirements of the company’s brick-and-mortar centers. Driven by these efforts, the company’s e-commerce sales jumped 23% in the third quarter of fiscal 2018, positively impacting the top line. Moreover, management projects robust opportunities in the omni-channel arena in the forthcoming quarters.
Further, United Natural remains committed toward achieving core strategic targets for 2018, some of which also drove third-quarter results. Markedly, both the top and the bottom lines improved year over year and surpassed estimates. This marked the fifth and third consecutive quarter of earnings and sales beat for the company, respectively. Solid focus on growth initiatives along with robust consumer demand fueled results. Notably, all sales channels witnessed growth, while supernatural channel marked highest-ever year-over-year growth rate in more than five years.
Moving back to the core strategies, these include plans to enhance customer base, expand the company’s broadline distribution channel, improve gross margin, expand e-commerce operations, and retain focus on mergers and buyouts. The company expects consistent demand growth for its better-for-you products. Further, United Natural strives to develop effective sourcing processes and supply-chain networks to better align supplies with demand, and thereby meet consumers’ needs more efficiently.
Buyouts Remain a Strong Driver
United Natural, which recently announced plans to buy SUPERVALU INC. , remains keen on undertaking acquisitions to grow distribution network, strengthen customer base and boost long-term growth. In this regard, the company acquired Haddon House in May 2016 and Gourmet Guru in August 2016. The Gourmet Guru deal has helped the company enhance strength in finding and cultivating emerging fresh and organic brands. It also expanded United Natural’s presence in key urban markets. The company’s acquisition of Haddon House Food Products also provided greater operating scale, and resources to develop product and service offerings. Other than these, the company is gaining from its buyouts of Nor-Cal Produce, Tony’s Fine Foods and Trudeau Distributing Company, among many others.
Will Cost Hurdles be Offset?
During third-quarter fiscal 2018, United Natural’s gross margin contracted 5 basis points (bps) to 15.41% on account of an unfavorable shift in consumer mix. Notably, sales from low margin customers grew at a rate higher than other customers, which dented gross margin rates during the first three quarters of fiscal 2018. Higher inbound freight costs have also been weighing on gross margin for some time and is expected to remain a hurdle in the next two quarters. Notably, many other food companies are grappling with cost-related headwinds. Evidently, escalated input costs are pressurizing food companies like Pinnacle Foods and Conagra Brands (CAG - Free Report) , among others.
Coming back to United Natural, higher demand has been creating much pressure upon the company’s supply chain. The company has also been incurring higher labor expenses across several distribution centers, due to the higher-than-anticipated demand. In fact, owing to the high demand, the company’s fill-rates have been worsening continuously since the past few quarters. During the third quarter, supplier out-of-stocks deteriorated 150 bps from the prior-year period. Nevertheless, United Naturals is focused on enhancing supply-chain networks to better align supplies with demand.
Also, the company’s solid market position and rising demand keep management encouraged to sustain the ongoing business growth momentum. In fact, management raised its fiscal 2018 sales and earnings outlook following the third-quarter results. This gives out positive signals for the quarter to be reported. The Zacks Consensus Estimate for sales is pegged at $2,601 million, up more than 11% from the year-ago reported figure. Further, the consensus mark for earnings has remained stable over the past 30 days at 85 cents, which shows an 18.1% jump from 72 cents recorded in the year-ago period.
What Does the Zacks Model Unveil?
Our proven model doesn’t show thatUnited Natural is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Though United Natural Foodscarries a Zacks Rank #2, its Earnings ESP of -1.40% makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.Best Electric Car Stock? You'll Never Guess It.
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United Natural Foods, Inc. (UNFI - Free Report) is scheduled to release fourth-quarter fiscal 2018 results on Sep 20. This renowned distributor of natural, organic and specialty food and non-food products boasts a splendid earnings surprise history and has outperformed the Zacks Consensus Estimate by an average of 13.4% in the trailing four quarters.
E-Commerce & Key Strategies to Fuel Growth
United Natural is set to continue gaining from its efforts to enhance presence in the e-commerce space, mainly through investments in technology and infrastructure. To this end, the company has successfully extended its online operations to its fourth fulfillment center. These centers enable United Natural to offer a wide array of online services for fulfilling the requirements of the company’s brick-and-mortar centers. Driven by these efforts, the company’s e-commerce sales jumped 23% in the third quarter of fiscal 2018, positively impacting the top line. Moreover, management projects robust opportunities in the omni-channel arena in the forthcoming quarters.
Further, United Natural remains committed toward achieving core strategic targets for 2018, some of which also drove third-quarter results. Markedly, both the top and the bottom lines improved year over year and surpassed estimates. This marked the fifth and third consecutive quarter of earnings and sales beat for the company, respectively. Solid focus on growth initiatives along with robust consumer demand fueled results. Notably, all sales channels witnessed growth, while supernatural channel marked highest-ever year-over-year growth rate in more than five years.
Moving back to the core strategies, these include plans to enhance customer base, expand the company’s broadline distribution channel, improve gross margin, expand e-commerce operations, and retain focus on mergers and buyouts. The company expects consistent demand growth for its better-for-you products. Further, United Natural strives to develop effective sourcing processes and supply-chain networks to better align supplies with demand, and thereby meet consumers’ needs more efficiently.
Buyouts Remain a Strong Driver
United Natural, which recently announced plans to buy SUPERVALU INC. , remains keen on undertaking acquisitions to grow distribution network, strengthen customer base and boost long-term growth. In this regard, the company acquired Haddon House in May 2016 and Gourmet Guru in August 2016. The Gourmet Guru deal has helped the company enhance strength in finding and cultivating emerging fresh and organic brands. It also expanded United Natural’s presence in key urban markets. The company’s acquisition of Haddon House Food Products also provided greater operating scale, and resources to develop product and service offerings. Other than these, the company is gaining from its buyouts of Nor-Cal Produce, Tony’s Fine Foods and Trudeau Distributing Company, among many others.
Will Cost Hurdles be Offset?
During third-quarter fiscal 2018, United Natural’s gross margin contracted 5 basis points (bps) to 15.41% on account of an unfavorable shift in consumer mix. Notably, sales from low margin customers grew at a rate higher than other customers, which dented gross margin rates during the first three quarters of fiscal 2018. Higher inbound freight costs have also been weighing on gross margin for some time and is expected to remain a hurdle in the next two quarters. Notably, many other food companies are grappling with cost-related headwinds. Evidently, escalated input costs are pressurizing food companies like Pinnacle Foods and Conagra Brands (CAG - Free Report) , among others.
Coming back to United Natural, higher demand has been creating much pressure upon the company’s supply chain. The company has also been incurring higher labor expenses across several distribution centers, due to the higher-than-anticipated demand. In fact, owing to the high demand, the company’s fill-rates have been worsening continuously since the past few quarters. During the third quarter, supplier out-of-stocks deteriorated 150 bps from the prior-year period. Nevertheless, United Naturals is focused on enhancing supply-chain networks to better align supplies with demand.
Also, the company’s solid market position and rising demand keep management encouraged to sustain the ongoing business growth momentum. In fact, management raised its fiscal 2018 sales and earnings outlook following the third-quarter results. This gives out positive signals for the quarter to be reported. The Zacks Consensus Estimate for sales is pegged at $2,601 million, up more than 11% from the year-ago reported figure. Further, the consensus mark for earnings has remained stable over the past 30 days at 85 cents, which shows an 18.1% jump from 72 cents recorded in the year-ago period.
What Does the Zacks Model Unveil?
Our proven model doesn’t show thatUnited Natural is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Though United Natural Foodscarries a Zacks Rank #2, its Earnings ESP of -1.40% makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.
Best Electric Car Stock? You'll Never Guess It.
Zacks Research has released a report that may shock many investors. One stock stands out as the best way to invest in the surge to electric cars. And it's not the one you may think!
Much like petroleum 150 years ago, lithium battery power is set to shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge. With battery prices plummeting and charging stations set to multiply, revenues that were already at $31 billion in 2016 are expected to blast to over $67 billion by the end of 2022.
See Zacks Best EV Stock Free >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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