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It's been a good week for US Foods Holding Corp. (NYSE:USFD) shareholders, because the company has just released its latest third-quarter results, and the shares gained 6.4% to US$22.66. Revenues of US$5.8b arrived in line with expectations, although statutory losses per share were US$0.01, an impressive 50% smaller than what broker models predicted. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the current consensus from US Foods Holding's nine analysts is for revenues of US$26.8b in 2021, which would reflect a notable 13% increase on its sales over the past 12 months. Earnings are expected to improve, with US Foods Holding forecast to report a statutory profit of US$1.21 per share. Before this earnings report, the analysts had been forecasting revenues of US$26.9b and earnings per share (EPS) of US$1.38 in 2021. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.
The consensus price target held steady at US$29.36, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic US Foods Holding analyst has a price target of US$35.00 per share, while the most pessimistic values it at US$22.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting US Foods Holding's growth to accelerate, with the forecast 13% growth ranking favourably alongside historical growth of 2.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 3.2% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect US Foods Holding to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at US$29.36, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple US Foods Holding analysts - going out to 2024, and you can see them free on our platform here.
Even so, be aware that US Foods Holding is showing 1 warning sign in our investment analysis , you should know about...
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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