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United Natural Up More Than 75% in 6 Months on Solid Demand

United Natural Foods, Inc. UNFI is in solid shape, courtesy of rising demand stemming from coronavirus-induced higher at-home consumption and other growth endeavors. Notably, this Zacks Rank #1 (Strong Buy) stock has surged 77.9% in the past six months compared with the industry’s growth of 16.6%. Moreover, the stock has comfortably outperformed the Zacks Consumer Staples sector’s increase of 14.3% during the same period.

Let’s dive deeper.

Rising Demand Amid COVID-19, Impressive Outlook

United Natural is gaining from rising demand stemming from coronavirus-induced higher at-home consumption. This was seen in the fourth quarter of fiscal 2020, with the top and the bottom line increasing year over year and surpassing the Zacks Consensus Estimate. Notably, earnings gained on higher sales and improved gross margin. Further, revenues were backed by robust demand, including benefits from cross selling.

Impressively, management anticipates food-at-home consumption demand to remain elevated —outpacing the demand for away-from-home services for fiscal 2021. United Natural anticipates fiscal 2021 net sales in the range of $27-$27.8 billion that suggests 3.3% growth over fiscal 2020 at midpoint. Further, the company envisions adjusted earnings per share of $3.05-$3.55 in 2021, which indicates an increase of 21.3% from fiscal 2020 levels at midpoint.

 

Other Growth Drivers

The company is undertaking various acquisitions over the years 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 has been 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, some other notable acquisitions of the company include Haddon House (in May 2016), Gourmet Guru (in August 2016) and Nor-Cal Produce, Inc (in 2016).

Moreover, United Natural is committed toward certain strategic targets that include enhancing customer base, expanding the company’s broad line distribution channel and improving profitability. To this end, the company is focusedon creating a sustainable and solution-based supply chain network. Additionally, management 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.

We believe that these upsides are likely to help United Natural stay in investors’ good books.

More Solid Food Stocks

The Hain Celestial HAIN, with a Zacks Rank #1, has a trailing four-quarter earnings surprise of 15.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

General Mills GIS, with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 7.5%.

Kellogg K, with a Zacks Rank #2, has a long-term earnings growth rate of 6%.

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The Hain Celestial Group, Inc. (HAIN): Free Stock Analysis Report
 
Kellogg Company (K): Free Stock Analysis Report
 
General Mills, Inc. (GIS): Free Stock Analysis Report
 
United Natural Foods, Inc. (UNFI): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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