BMO Capital has revised its price target for United Natural Foods (UNFI, Financial), bringing it down to $25 from a previous $32, while maintaining a Market Perform rating on the stock. Despite the company reporting robust third-quarter results driven by strong sales trends, these positives were marred by an IT system breach and a shutdown of its network. As of now, the management has refrained from updating its guidance due to the uncertain duration and costs associated with these issues.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 9 analysts, the average target price for United Natural Foods Inc (UNFI, Financial) is $27.00 with a high estimate of $33.00 and a low estimate of $24.00. The average target implies an upside of 22.01% from the current price of $22.13. More detailed estimate data can be found on the United Natural Foods Inc (UNFI) Forecast page.
Based on the consensus recommendation from 12 brokerage firms, United Natural Foods Inc's (UNFI, Financial) average brokerage recommendation is currently 2.8, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for United Natural Foods Inc (UNFI, Financial) in one year is $25.00, suggesting a upside of 12.97% from the current price of $22.13. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the United Natural Foods Inc (UNFI) Summary page.
UNFI Key Business Developments
Release Date: June 10, 2025
- Revenue: Third-quarter sales grew by 7.5% to nearly $8.1 billion.
- Wholesale Natural Products Sales: Increased by 12% compared to last year's third quarter.
- Wholesale Conventional Products Sales: Up close to 3% year-over-year.
- Same-Store Sales: Increased by 1.5% on an ID basis.
- Gross Margin Rate: Declined 30 basis points to 13.4% of net sales.
- Adjusted EBITDA: Grew 21% to $157 million, with an adjusted EBITDA rate of 2%.
- Adjusted EPS: Increased to $0.44 from $0.10 in the prior year's third quarter.
- Free Cash Flow: Generated $119 million in the quarter, $70 million more than the previous year.
- Net Debt: Reduced to under $1.93 billion, with net leverage at 3.3 turns.
- Capital Structure: Made a $100 million prepayment on the term loan, saving $1 million in quarterly interest expense.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- United Natural Foods Inc (UNFI, Financial) achieved a solid quarter with sales growth of 7.5%, driven by strong performance in its Wholesale Natural Products business.
- The company reported a significant improvement in adjusted EBITDA, which grew by 21% compared to the prior year quarter, reaching $157 million.
- UNFI's free cash flow generation was robust, with $119 million generated in the quarter, significantly surpassing the previous year's third quarter.
- The company successfully reduced its net leverage by 1.3 turns compared to last year's third quarter, demonstrating effective debt management.
- UNFI's lean daily management implementation in 20 distribution centers has led to improvements in safety, quality, delivery, and cost, with further opportunities for enhancement.
Negative Points
- UNFI experienced an IT systems security breach, which required the company to activate its incident response plan and could potentially impact its operations and financial performance.
- The company faced a decline in its consolidated gross margin rate, excluding LIFO, by 30 basis points compared to the prior year period, due to a lower Wholesale margin rate and a shift in customer and product mix.
- UNFI had to terminate its distribution agreement with Key Food, resulting in a $53 million termination fee and the closure of its Allentown facility, impacting its Northeast DC network.
- The cyber incident has introduced uncertainty, leading the company to maintain its guidance for key non-GAAP financial metrics, despite strong performance year to date.
- There are potential elevated costs associated with managing the cyber incident and maintaining customer service, which could affect the company's financials in the short term.
