We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will United Natural (UNFI) Sustain Solid Run on High Demand?
Read MoreHide Full Article
United Natural Foods, Inc. (UNFI - Free Report) is benefiting from growth endeavors like focus on key strategies and lucrative acquisitions. Moreover, the company is witnessing rising demand from coronavirus-induced higher at-home consumption.
Such upsides have led United Natural’s stock to more than double in the past year compared with the industry’s growth of 1.9%. Moreover, shares have comfortably outperformed the Zacks Consumer Staples sector’s decline of 0.7% during the same period. Let’s discuss the factors, which are likely to continue driving the company’s growth.
Factors Working in Favor of United Natural
United Natural is committed toward certain strategic targets that include plans like building and optimizing its distribution channel network, expanding brand portfolio and augmenting e-commerce business among others. In this regard, the company is on track with consolidating its distribution centers and making investment toward automation to enhance operational savings. Also, United Natural is focused on growing higher margin private brands, e-commerce and Retail Solutions businesses. In October 2020, the company partnered with Key Food to supply branded and private label conventional as well as natural products in the latter’s stores.
Additionally, the company is on track with improving margins, cash flow and revenue streams. Further, it strives to develop effective sourcing processes to better align supplies with demand and thereby meet consumers’ needs more efficiently.
Moreover, United Natural is keen on undertaking acquisitions to expand its distribution network and customer base as well as boost long-term growth. In this regard, United Natural completed the buyout of SUPERVALU in October 2018. The enhanced scale of the combined entities is driving United Natural’s performance. Moreover, the merger provided better competing grounds to the company in the grocery space by augmenting offerings.
Apart from these, United Natural is gaining from burgeoning demand amid coronavirus-induced elevated at-home consumption. This was seen in the first quarter of fiscal 2021, with the top and the bottom line increasing year over year. Net sales from continuing operations increased 6% backed by robust customer demand from existing and new retailers along with continued gains of cross selling. Notably, increase in retail sales reflected significant benefit from higher e-commerce sales at Cub Foods. In fact, management expects food-at-home consumption demand to remain elevated outpacing the demand for away-from-home services for the rest of fiscal 2021.
Hurdles on the way
In first-quarter fiscal 2021, United Natural incurred higher operating cost of around $20 million. This was caused by coronavirus-induced hurdles as well as expenses related to new distribution channel productivity growth. We note that rise in operating costs related to the start up of three distribution centers affected the company’s adjusted operating income during the quarter.
Nevertheless, we believe that the aforementioned upsides are likely to help this Zacks Rank #3 (Hold) company stay afloat amid such hurdles and keep its growth story alive.
B&G Foods, Inc. (BGS - Free Report) — also sporting a Zacks Rank #1 at present — has a trailing four-quarter earnings surprise of 9.3%, on average.
Darling Ingredients (DAR - Free Report) , a Zacks Ranked #2 (Buy) stock,has a trailing four-quarter earnings surprise of 26.3%, on average.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Will United Natural (UNFI) Sustain Solid Run on High Demand?
United Natural Foods, Inc. (UNFI - Free Report) is benefiting from growth endeavors like focus on key strategies and lucrative acquisitions. Moreover, the company is witnessing rising demand from coronavirus-induced higher at-home consumption.
Such upsides have led United Natural’s stock to more than double in the past year compared with the industry’s growth of 1.9%. Moreover, shares have comfortably outperformed the Zacks Consumer Staples sector’s decline of 0.7% during the same period. Let’s discuss the factors, which are likely to continue driving the company’s growth.
Factors Working in Favor of United Natural
United Natural is committed toward certain strategic targets that include plans like building and optimizing its distribution channel network, expanding brand portfolio and augmenting e-commerce business among others. In this regard, the company is on track with consolidating its distribution centers and making investment toward automation to enhance operational savings. Also, United Natural is focused on growing higher margin private brands, e-commerce and Retail Solutions businesses. In October 2020, the company partnered with Key Food to supply branded and private label conventional as well as natural products in the latter’s stores.
Additionally, the company is on track with improving margins, cash flow and revenue streams. Further, it strives to develop effective sourcing processes to better align supplies with demand and thereby meet consumers’ needs more efficiently.
Moreover, United Natural is keen on undertaking acquisitions to expand its distribution network and customer base as well as boost long-term growth. In this regard, United Natural completed the buyout of SUPERVALU in October 2018. The enhanced scale of the combined entities is driving United Natural’s performance. Moreover, the merger provided better competing grounds to the company in the grocery space by augmenting offerings.
Apart from these, United Natural is gaining from burgeoning demand amid coronavirus-induced elevated at-home consumption. This was seen in the first quarter of fiscal 2021, with the top and the bottom line increasing year over year. Net sales from continuing operations increased 6% backed by robust customer demand from existing and new retailers along with continued gains of cross selling. Notably, increase in retail sales reflected significant benefit from higher e-commerce sales at Cub Foods. In fact, management expects food-at-home consumption demand to remain elevated outpacing the demand for away-from-home services for the rest of fiscal 2021.
Hurdles on the way
In first-quarter fiscal 2021, United Natural incurred higher operating cost of around $20 million. This was caused by coronavirus-induced hurdles as well as expenses related to new distribution channel productivity growth. We note that rise in operating costs related to the start up of three distribution centers affected the company’s adjusted operating income during the quarter.
Nevertheless, we believe that the aforementioned upsides are likely to help this Zacks Rank #3 (Hold) company stay afloat amid such hurdles and keep its growth story alive.
Better-Ranked Food Stocks
The Hain Celestial (HAIN - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 24.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
B&G Foods, Inc. (BGS - Free Report) — also sporting a Zacks Rank #1 at present — has a trailing four-quarter earnings surprise of 9.3%, on average.
Darling Ingredients (DAR - Free Report) , a Zacks Ranked #2 (Buy) stock,has a trailing four-quarter earnings surprise of 26.3%, on average.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>