United Natural Foods, Inc. (NASDAQ:UNFI) will release its quarterly report on Thursday, and after a good-sized pullback earlier in the year, the stock has climbed to set new all-time record highs in the past month. The shares carry a sizable valuation, but growth in United Natural earnings should be ample enough to satisfy investors who are hungry for strong results.
United Natural Foods, Inc. (NASDAQ:UNFI) has jumped on the healthy-foods trend with a vengeance, taking advantage of its relationships with key natural-foods retailers to bolster its once-niche business. But having operated in what was a small corner of the food distribution market for such a long time, United Natural could start seeing more competition from an industry giant. Let’s take an early look at what’s been happening with United Natural Foods over the past quarter and what we’re likely to see in its report.
Stats on United Natural Foods
| Analyst EPS Estimate | $0.60 |
| Change From Year-Ago EPS | 17.6% |
| Revenue Estimate | $1.63 billion |
| Change From Year-Ago Revenue | 21% |
| Earnings Beats in Past 4 Quarters | 0 |
Source: Yahoo! Finance.
Will United Natural earnings stay healthy this quarter?
Analysts have largely left their views on United Natural Foods, Inc. (NASDAQ:UNFI) earnings unchanged in recent months, keeping their July-quarter estimates stable and adding a single penny per share to their fiscal 2014 consensus figures. The stock, though, has climbed markedly, posting gains of more than 14% since early June.
But despite any concerns, United Natural Foods, Inc. (NASDAQ:UNFI) remains in a strong position. Key customer Whole Foods Market, Inc. (NASDAQ:WFM) has noted the importance of United Natural in its annual report, citing any potential disruption in its supply relationship as potentially hurting its business. With United Natural making up more than 30% of Whole Foods purchases in the past couple of years, the extension last year of their partnership through 2020 bodes well for both companies.
At the same time, United Natural Foods, Inc. (NASDAQ:UNFI) has other avenues to pursue in expanding its business. Despite a slowdown in growth in its most recent quarter, The Fresh Market Inc (NASDAQ:TFM) has seen double-digit percentage increases in sales and earnings that show the breadth of the healthy-food movement. The trend could get even more attention as Fresh Market expands into key Whole Foods Market, Inc. (NASDAQ:WFM) areas like California and Texas. Moreover, even traditional grocery chains have boosted their offerings of organic and natural foods, giving United Natural’s brands more exposure on store shelves.
The big question in the long run is whether United Natural Foods, Inc. (NASDAQ:UNFI)’s success will entice food-distribution giant SYSCO Corporation (NYSE:SYY) into the natural-food segment. Sysco’s own earnings results were tepid at best, with an 11% drop in year-over-year earnings that exposed its vulnerability to rising costs and weak demand from its customers. Pursuing higher-growth opportunities could naturally push Sysco into United Natural’s niche, and although Sysco couldn’t take over overnight, its economies of scale could pose a long-term threat.
In the United Natural Foods, Inc. (NASDAQ:UNFI) earnings report, watch to see whether the company can finally top expectations. Good news could easily send the stock soaring to new all-time highs once more.
The article Will United Natural Earnings Satisfy Bullish Shareholders? originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Sysco and The Fresh Market. It recommends and owns shares of Whole Foods Market.
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