Top Momentum Stock (Consumer Staples): United Natural Foods (UNFI)

By Kirsteen Mackay

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UNFI stock has been enjoying upward share price momentum thanks to upbeat Q4 earnings. It's a massive company, can it keep growing and rewarding shareholders?

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United Natural Foods, Inc. (NYSE: UNFI)

United Natural Foods, Inc., together with its subsidiaries, distributes natural, organic, specialty, produce, and conventional grocery and non-food products in the United States and Canada. It operates in two segments, Wholesale and Retail.

The company offers grocery and general merchandise, produce, perishables and frozen foods, nutritional supplements and sports nutrition, bulk, foodservice products, and personal care items.

The company serves chains, independent retailers, food service, e-commerce, conventional military business, and other sales customers.

Founded in 1976, United Natural Foods, Inc. is headquartered in Providence, Rhode Island.

What are the basic fundamentals of UNFI stock?

UNFI stock's market capitalization is approximately $2.6bn. It has around $3.4bn in debt, and free cash flow is roughly $304m.

Is 11 a good P/E ratio?

United Natural Foods has a forward P/E of 11.7.

The stock price divided by its earnings per share gives us the P/E ratio. This means if the P/E is high, investors are confident it will go on to earn a lot more money. If the P/E is low, there are doubts in investors' minds.

Traditionally a P/E ratio below 10 was considered a bargain, value stock. But a P/E lower than 5 is particularly risky, indicating the company is in distress.

A P/E between 10 and 20 is generally considered fair for a quality company that many investors agree shows potential. When a P/E gets very high, it may indicate the stock is becoming overvalued and therefore expensive. But that's not always the case as it can also simply show extreme confidence in a stock that may well grow into its earnings ratio.

Is 1 a good P/B ratio?

United Natural Foods has a Price/Book value of 1.8x.

The price-to-book (P/B) ratio is a favorite financial metric among value investors. Traditionally, a P/B value below 1 is considered a good P/B value., indicating a stock that may be undervalued.

Is 1 a good P/S ratio?

United Natural Foods has a Price/Sales ratio of 0.1x.

The price-to-sales (P/S) ratio is a prized financial metric used by analysts and investors.

A P/S ratio below one is considered excellent, while a P/S ratio between one and two is considered good.

The P/S ratio shows how much an investor is paying for the stock per dollar of the company's sales. Legendary investor James O'Shaughnessy found that the P/S ratio was the single best indicator of a stock's value and predictor of its future.

Is United Natural Foods generating sales?

United Natural Foods has a 3-year CAGR for Sales of 38.1%.

Sales growth for its latest interim period vs. the prior period is negative at -0.44%.

Is United Natural Foods increasing earnings?

United Natural Foods also has a 3-year EPS CAGR of 2.98%.

EPS growth for its latest interim period vs. the prior period is negative at -2.8%.

What is the target price for UNFI stock?

The UNFI share price has risen approximately 175% in the past year.

Analyst estimates indicate UNFI stock has a 12-month average share price target of $46.86 with a potential downside of 1%.

How many ETFs hold UNFI stock?

United Natural Foods, Inc. stock is held in 90 ETFs.

Exchange-traded funds (ETFs) are created by institutions such as investment banks and fund managers. They are a popular risk-reduced way of investing. If a stock is found in many ETFs, it shows increased confidence in the company.

Does United Natural Foods pay a dividend?

UNFI does not currently offer shareholders a dividend yield.

What is United Natural Foods's current short interest?

At the time of writing, United Natural Foods had over 6.8% short interest in its stock.

Short interest as a percentage of float above 10% is considered high and above 20% is exceptionally high.

How do you know if a stock has high momentum?

Traders look at various chart indicators to help guide them to momentum-driven stock picks. Some of these include the rate of change, trading volume, and relative strength.

  • A rate of change (RoC) above zero can indicate upward momentum in the stock.

  • An increase in trading volume shows us interest in the equity is real.

  • The relative strength index (RSI) compares the size of recent gains to recent losses. When RSI moves higher, crossing from under 30 to above 30, it is generally considered a buy signal.

None of these should be used in isolation, but when considered together, can help predict stocks that are gaining momentum.

At the time of writing, UNFI stock is currently building momentum. Its relative strength for one month is 32%, three months is 30%, six months is 25%, and one year is 118%.

Macro overview

Between 1999 and 2015, UNFI was a star performer thanks to its aggressive M&A strategy. Unfortunately, analysts are less bullish these days as it doesn't have an obvious competitive advantage, and the potential for continued acquisitions is reduced.

Nevertheless, it's a massive company and recently reported upbeat Q4 earnings.

For its fiscal year 2022, UNFI expects adjusted earnings in the range of $3.90 - $4.20 per share. This comes in higher than the consensus forecast of $3.38 per share.

Revenue for the full year is expected to come between $27.8bn and $28.3bn. This is in line with analysts' average estimates of $27.8bn.

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Topics:
Food and Staples Retailing
Food Retail
Industries:
Consumer Staples
Companies:
United Natural Foods

Author: Kirsteen Mackay

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Kirsteen Mackay does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.