United Natural Foods Posts Disappointing Q3 Revenues; Shares Tumble 15.7%

Shares of United Natural Foods (UNFI) plunged 15.7% on June 9 to close at $34.26 after the premier food wholesaler posted disappointing revenues for fiscal third-quarter.

UNFI is the distributor of organic and specialty foods in the United States and Canada.

Revenues of $6.62 billion lagged the consensus estimate of $6.82 billion. However, the company reported adjusted earnings of $0.94 per share, beating analysts’ expectations of $0.88 per share.

Meanwhile, earnings per share and revenues declined 29.3% and 5.9%, respectively, on a year-over-year basis. The company reported earnings of $1.33 per share in the year-ago period.

Gross margin declined 34 basis points to 14.6% and adjusted EBIDTA fell 19% year-over-year to $179 million. (See UNFI stock analysis on TipRanks)

United CFO John Howard said, “Although our sales have moderated, as expected, from the unprecedented levels experienced during last year’s third quarter, our focus on operational efficiencies and our ValuePath productivity initiative keep us on track to deliver full-year results at the upper end of the range for adjusted EBITDA and adjusted EPS.”

He added, “Due to the extended timing of onboarding new business wins, we now expect to finish at the low end of the current range for net sales, which we expect will result in a second consecutive record sales year for UNFI.”

Following the results announcement, Jefferies analyst Matthew Fishbein reiterated a Hold rating with the price target of $34 (0.8% downside potential) on the stock.

Overall, the stock has a Moderate Buy consensus rating based on 1 Buy and 3 Holds. UNFI average analyst price target of $36.50 implies 6.5% upside potential from current levels. Shares of UNFI have jumped 91.4% over the past year.

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