United Natural Foods, Inc. (UNFI) posted a new 52-week record high of $47.49 after the company delivered better-than-expected fourth-quarter earnings. Despite the difficult operating environment amid supply chain disruptions and rising costs, the company managed to report solid quarterly earnings as demand momentum continued.
UNFI is the largest wholesale distributor of natural, organic, and specialty foods in the U.S. and Canada. Shares soared 23.7% to close at $46.98 on September 28, following the results. (See United Natural Foods stock charts on TipRanks)
The company reported Q4 adjusted earnings of $1.18 per share, up 11.3% compared to the prior-year period and significantly better than the Street’s estimate of $0.80 per share.
However, quarterly net sales remained almost flat at $6.74 billion compared to the year-ago period and missed analysts’ estimates of $6.85 billion. Sales in Q4FY20 were higher due to the pandemic-related buying spree by customers.
For Fiscal 2021, UNFI posted adjusted earnings of $3.88 per share, up 42.6% year-over-year, and net sales grew 1.5% to $26.95 billion.
Commenting on the company’s results, Sandy Douglas, who took over as CEO on August 9, said, “I have been impressed with the passion and commitment of our associates in helping our customers navigate today’s challenging operating environment. I see significant opportunity to accelerate the value we create with and for our customers as well as the opportunity to make our operations more effective and efficient, both leading to continued profitable growth within our estimated $140 billion addressable market.”
Based on the company’s current performance and expected momentum in Fiscal 2022, UNFI guided for full-year Fiscal 2022 net sales to be in the range of $27.8 – $28.3 billion, while the consensus estimate is pegged at $27.81 billion.
Additionally, FY22 adjusted earnings are forecast in the range of $3.90 – $4.20 per share, much higher than consensus estimates of $3.38 per share.
In response to UNFI’s solid financial performance and upbeat EPS guidance, MKM Partners analyst William Kirk maintained a Buy rating on the stock with a price target of $46, implying 2.1% downside potential to current levels.
Kirk said, “We believe this beat and forward guidance should be enough to get investors to address their pessimistic outlook for the company. With new regions coming online and existing regions being optimized, we believe UNFI’s targets have concrete actionable steps to be achieved.”
Overall, the stock has a Hold consensus rating based on 1 Buy and 1 Sell. The average United Natural Foods price target of $38 implies 19.1% downside potential to current levels. Shares have exploded 185.4% over the past year.