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United Natural (UNFI) Stock Jumps 18.2%: Will It Continue to Soar?

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Zacks Equity Research
·2 min read
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United Natural Foods (UNFI) shares rallied 18.2% in the last trading session to close at $36.06. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 8.8% gain over the past four weeks.

Shares of United Natural got a boost from the company’s robust second-quarter fiscal 2021 results, wherein both top and bottom lines increased year over year. Results were backed by robust customer demand from existing as well as new retailers including continued gains of cross selling, together with lower costs. Also, strength in e-commerce sales remained a driver. To top it, management said that it now expects fiscal 2021 adjusted EPS and adjusted EBITDA to come in at the upper end of its previously guided view. Incidentally, the company expects food-at-home consumption to stay high in fiscal 2021.

Certainly, United Natural remains committed toward optimizing distribution network, creating increased operating benefits to its Value Path initiative, curtailing cost structure and making technology related investments. Also, management remains encouraged about its recently extended deal with its biggest customer – Whole Foods Market.

Talking of the second quarter of fiscal 2021, adjusted earnings of $1.25 per share cruised past the Zacks Consensus Estimate of 92 cents. Moreover, the bottom line rose significantly from 25 cents reported in the year-ago period. Net sales from continuing operations advanced 7.1% to $6,888 million, marking an increase of 110 basis points from 6% growth witnessed in the first quarter.

Price and Consensus

Price Consensus Chart for United Natural
Price Consensus Chart for United Natural

This organic and specialty foods distributor is expected to post quarterly earnings of $0.88 per share in its upcoming report, which represents a year-over-year change of -37.1%. Revenues are expected to be $6.74 billion, up 1.2% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For United Natural, the consensus EPS estimate for the quarter has been revised 1.1% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on UNFI going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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