United Natural Foods Inc

We remain constructive on United Natural Foods (UNFI), following its December investor day. The stock has rebounded nearly 50% from recent lows, supported by improving sentiment and early signs of shareholder-friendly capital allocation, including share repurchases. The company continues to trade at an attractive free cash flow yield (>10%), with multiple levers for earnings growth, including margin expansion and declining interest expense.

United Natural Foods (UNFI) has shown continued progress as it recovers from last summer’s cyberattack, which has positively impacted its performance. The company is on a path to recovery, and this optimism is reflected in our decision to add to our position. The turnaround efforts appear to be yielding results, suggesting that UNFI is well-positioned for future growth as it navigates past challenges.

United Natural Foods is positioned for significant upside as it is on track to trade below 4x EV/EBITDA, with management guiding towards $800M EBITDA by FY28. Despite a recent cyber-attack that impacted operations, we doubled down on our position, indicating strong conviction in its recovery. The company is generating approximately $300M in free cash flow for FY26, which supports our belief in its undervaluation relative to its intrinsic value. We view the current stock price as a temporary setback and expect the market to recognize its potential as operational improvements take hold.

United Natural Foods (UNFI) exemplifies our approach to developing edge through misunderstood situations. Despite a cyber-attack that paralyzed their distribution network for over 10% of the most recent quarter, management still exceeded sales guidance — demonstrating exceptional execution under pressure. The cyber event appears mostly covered by insurance and has deepened customer relationships rather than strained them. Management's September 30th guidance for the upcoming year shows continued execution well ahead of Wall Street expectations. With $300m of free cash flow expected from operations in FY26, another $150m from cyber insurance proceeds and asset sales, UNFI trades below 6x EV/EBITDA—a persistent discount to peers.

United Natural Foods (UNFI) exemplifies our approach to developing edge through misunderstood situations. Despite a cyber-attack that paralyzed their distribution network for over 10% of the most recent quarter, management still exceeded sales guidance — demonstrating exceptional execution under pressure. The cyber event appears mostly covered by insurance and has deepened customer relationships rather than strained them. Management's September 30th guidance for the upcoming year shows continued execution well ahead of Wall Street expectations. With $300m of free cash flow expected from operations in FY26, another $150m from cyber insurance proceeds and asset sales, UNFI trades below 6x EV/EBITDA—a persistent discount to peers.

Far View Capital Management is optimistic about United Natural Foods Inc. (UNFI) as strong results have alleviated investor concerns stemming from a summer cyber-attack. The manager noted that the market is refocusing on the company's turnaround, which is a positive sign for future performance. They capitalized on the share price decline caused by the cyber-attack to add back shares previously sold at higher prices, indicating confidence in the company's recovery and growth potential.

In early June, United Natural Foods (UNFI) hit a significant speedbump when a cyber-attack shut down most company systems. The outage lasted approximately ten days, but the impact was contained, and systems have resumed activity. The stock remains depressed despite the company confirming their cyber insurance should effectively mitigate event costs. Furthermore, the company accelerated their long-term guidance, showing their business transformation is exceeding plan. We’re perplexed that the stock remains at $22 despite the cleared air, after trading above $32 right before the event. This created another ~1% Q2 headwind, but we view the June earnings release and management commentary as the best evidence yet that their turnaround is gaining momentum, not losing it.

We love the counter-cyclical exposure of United Natural Foods (UNFI) to grocery trade-down from restaurants. There are two potential tailwinds we believe the market is missing. One is proposed restrictions on SNAP spending on 'junk' food, pushing $8B of monthly government assistance towards UNFI’s categories. The other is a looming contract expiration KeHe has with Sprouts Farmers Market, which covers about $2B of annual revenue. UNFI is the backup supplier and could stand to benefit from increased volumes if they can win more of the renewal. Even without these possible catalysts, UNFI is growing volumes and showing their turnaround is gaining steam. As they currently stand, tariffs on food imports and packaging will accelerate food inflation, which is beneficial for UNFI.

We love the counter-cyclical exposure of United Natural Foods (UNFI) to grocery trade-down from restaurants. There are two potential tailwinds we believe the market is missing. One is proposed restrictions on SNAP spending on 'junk' food, pushing $8B of monthly government assistance towards UNFI’s categories. The other is a looming contract expiration KeHe has with Sprouts Farmers Market, which covers about $2B of annual revenue. UNFI is the backup supplier and could stand to benefit from increased volumes if they can win more of the renewal. Even without these possible catalysts, UNFI is growing volumes and showing their turnaround is gaining steam.

Despite a recent cyberattack that caused a share price decline, United Natural Foods Inc. (UNFI) continues to demonstrate strong underlying results and operational improvements. The company has accelerated its leverage target due to better-than-expected cash generation, indicating that its operational performance remains ahead of expectations. The manager believes that UNFI is well-positioned to recover strongly from this challenge, and the recent share price decline provided an opportunity to add back shares at lower prices.