Why United Natural Foods, Inc. Stock Popped Today

What: Shares of United Natural Foods rose as much as 12.3% on Tuesday after the organic food specialist released stronger-than-expected fiscal second-quarter 2016 results and a strategic acquisition.

So what: Quarterly revenue rose 1.5% year over year to $2.05 billion, but would have risen 6.5% had it not been for the negative impact of a previously disclosed termination of a customer distribution contract. Based on generally accepted accounting principles (GAAP), that translated to an 18.2% decline in earnings per diluted share to $0.45. On an adjusted (non-GAAP) basis, which notably excludes items related to restructuring and acquisition costs, earnings per share were $0.49.

For perspective, these results are also slightly above the preliminary guidance which caused United Natural Foods stock to plunge less than two weeks ago. That guidance calls for revenue in the range of $2.046 billion to $2.048 billion, GAAP EPS of $0.43 to $0.45, and adjusted EPS between $0.47 and $0.49.

In addition, United Natural Foods announced the acquisition of Global Organic/Specialty Source, a distributor of organic fruits, vegetables, juices, milk, eggs, nuts, and coffee whose primary operations are located within the same facility as UNFI in Sarasota, Florida. Global Organic's operations will be combined with UNFI's existing Albert's business in the Southeast.

Now what: United Natural Foods CEO Steven Spinner stated:

For the full fiscal year 2016, United Natural Foods reaffirmed its outlook provided last month, which calls for revenue of $8.31 billion to $8.43 billion, or growth of 1.5% to 3% over fiscal 2015, GAAP earnings per diluted share of $2.27 to $2.37, and adjusted earnings per share of $2.34 to $2.44. Note this guidance does not include any contributions from UNFI's impending acquisition of Global Organic.

United Natural Foods formal report didn't contain any big surprises. But it is encouraging that the company managed to not only outperform its preliminary guidance, but secure an acquisition to continue expanding its scope and accelerate growth down the road. In the end, then, it's no surprise to see the stock up nicely today.

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The article Why United Natural Foods, Inc. Stock Popped Today originally appeared on Fool.com.

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