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Why Is United Natural (UNFI) Down 12.3% Since Last Earnings Report?

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A month has gone by since the last earnings report for United Natural Foods (UNFI - Free Report) . Shares have lost about 12.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is United Natural due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

United Natural Q2 Earnings Top Estimates, Sales Fall Y/Y

United Natural posted second-quarter fiscal 2024 results, wherein the top and bottom lines declined year over year, and net sales missed the Zacks Consensus Estimate. Management lowered its net sales guidance for fiscal 2024 while narrowing its adjusted EBITDA and bottom-line guidance range.

Nonetheless, the results underscore the commitment and advancements made by the company toward execution and profitability enhancement during the crucial holiday period. UNFI experienced greater-than-expected advantages from short-term strategies aimed at value creation, alongside witnessing notable progress in shrink management, which helped offset the anticipated decrease in procurement benefits and expenses associated with launching a new distribution center.

Quarter in Detail

United Natural’s adjusted earnings came in at 7 cents per share, which beat the Zacks Consensus Estimate of 1 cent. However, the bottom line slumped 91% from 78 cents reported in the year-ago period.

Net sales inched down 0.5% to $7,775 million, missing the Zacks Consensus Estimate of $7,918 million. The downside can be attributed to lower unit volumes, partly compensated by inflation and new business with existing customers, mainly in the company’s Supernatural channel.

Chains, Independent retailers and Retail witnessed a sales decline of 1.7%, 3.7% and 4.4%, respectively. Supernatural and Other channels rose 5.5% and 1%, respectively.

United Natural’s gross profit fell 3.2% to $1,035 million. Excluding the non-cash LIFO charge in both periods, the gross margin contracted 60 basis points to 13.4% in the second quarter due to reduced levels of procurement gains stemming from decelerating inflation.

Operating expenses were $1,010 million compared with $1,002 million reported in the year-ago quarter. Excluding business transformation costs, operating expenses came in at 12.8% of net sales, in line with the year-ago period.

Adjusted EBITDA came in at $128 million, down from the $181 million reported in the year-ago quarter.

Other Updates

The company ended the quarter with total liquidity of nearly $1.43 billion, including cash of nearly $34 million and a borrowing capacity of about $1.40 billion under the company’s asset-backed lending facility. Total outstanding debt (net of cash) was $2.16 billion, down $124 million on a sequential basis.

During the second quarter, United Natural’s free cash flow amounted to $116 million, with net cash provided by operating activities being $183 million.

Fiscal 2024 Guidance

For fiscal 2024, the company anticipates net sales in the range of $30.5-$31.0 billion compared with the prior view of $30.9-$31.5 billion. Adjusted EBITDA is now expected in the $475-$525 million range compared with the $450-$550 million range forecasted earlier. UNFI now expects to deliver a net loss of $101-$65 million in fiscal 2024 compared with a net loss of $120-$46 million expected earlier. United Natural now envisions the fiscal 2024 bottom line between a loss of 56 cents and earnings of 6 cents. Management had earlier guided the bottom line between a loss of 88 cents per share and earnings of 38 cents. The company still projects capital expenditures of nearly $400 million for fiscal 2024.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -28.75% due to these changes.

VGM Scores

At this time, United Natural has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, United Natural has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

United Natural is part of the Zacks Food - Miscellaneous industry. Over the past month, B&G Foods (BGS - Free Report) , a stock from the same industry, has gained 0.6%. The company reported its results for the quarter ended December 2023 more than a month ago.

B&G Foods reported revenues of $578.13 million in the last reported quarter, representing a year-over-year change of -7.2%. EPS of $0.30 for the same period compares with $0.40 a year ago.

For the current quarter, B&G Foods is expected to post earnings of $0.21 per share, indicating a change of -22.2% from the year-ago quarter. The Zacks Consensus Estimate has changed +4.8% over the last 30 days.

B&G Foods has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.

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