Momentum investing is all about the idea of following a stock's recent trend, which can be in either direction. In the 'long' context, investors will essentially be "buying high, but hoping to sell even higher." And for investors following this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving in that direction. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.Even ...

News of an estimates-busting quarter and subsequent analyst price target raises drove United Natural Foods (UNFI 1.35%) stock higher over the past few days. Consequently, according to data compiled by S&P Global Market Intelligence, as of early morning Friday the company's shares were more than 18% higher in price week to date.A fine way to start the new fiscal yearUnited, which is the No. 1 wholesale provider of organic and natural food products, unveiled its latest set of quarterly results on Tuesday. In ...

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional val ...

Financial Performance - Net sales for the first quarter of fiscal 2025 increased by 4.2% to $7,871 million, compared to $7,552 million in the first quarter of fiscal 2024[137] - Gross profit rose by $8 million, or 0.8%, to $1,038 million, with a gross profit margin of 13.2%, down from 13.6% in the prior year[141] - Operating expenses decreased by $8 million, or 0.8%, to $1,015 million, representing 12.9% of net sales, down from 13.5%[142] - Operating income improved by $21 million to $5 million, compared to an operating loss of $16 million in the first quarter of fiscal 2024[145] - Net loss attributable to United Natural Foods, Inc. was $21 million, or $0.35 per diluted share, compared to a net loss of $39 million, or $0.67 per diluted share, in the prior year[151] - Adjusted EBITDA increased by $17 million to $134 million, driven by gross profit growth and decreased operating expenses[153] - Wholesale net sales increased by $309 million to $7,590 million, primarily due to higher unit volumes and inflation[153] - Retail net sales decreased by $20 million to $586 million, primarily due to a 1.4% decrease in identical store sales[155] Cost and Expenses - The company reported a product cost inflation of approximately 1% in Q1 fiscal 2025 compared to Q1 fiscal 2024[117] - Restructuring, acquisition, and integration-related expenses rose to $12 million from $4 million, driven by higher employee severance costs[143] - Interest expense increased to $36 million from $35 million, primarily due to higher average interest rates[146] Liquidity and Debt - Total liquidity as of November 2, 2024, was $1,174 million, consisting of $1,137 million in unused credit and $37 million in cash[159] - Total debt increased by $162 million to $2,247 million as of November 2, 2024, primarily due to additional net borrowings under the ABL Credit Facility[159] - Working capital rose by $176 million to $1,213 million as of November 2, 2024, driven by seasonal increases in inventory and accounts receivable[159] Capital Expenditures and Investments - Capital expenditures for the first quarter of fiscal 2025 were $49 million, a decrease of $25 million compared to $74 million in the first quarter of fiscal 2024[170] - Fiscal 2025 capital and cloud implementation spending is expected to be approximately $300 million, focusing on distribution network automation and technology platform investments[171] - The company anticipates financing fiscal 2025 capital and cloud implementation expenditures with cash generated from operations and borrowings under the ABL Credit Facility[171] Distribution and Operations - A new distribution center in Manchester, Pennsylvania, with approximately 1.3 million square feet, began operations in Q1 fiscal 2025[113] - The company has 53 distribution centers and warehouses, totaling approximately 31 million square feet of warehouse space across North America[104] - The company is optimizing its distribution center network to achieve cost savings and improve customer experience[112] - The company plans to evaluate its distribution center network for further optimization and efficiency improvements[114] Market Risks - The company's exposure to market risk is primarily due to fluctuations in interest rates on borrowings and interest rate swap agreements[191] - Price increases in diesel fuel also contribute to the company's market risk exposure[191] - There have been no material changes to the company's exposure to market risks compared to those disclosed in the Annual Report[191] Shareholder Actions - The company did not repurchase any shares in the first quarter of fiscal 2025, with $138 million remaining authorized under the 2022 Repurchase Program[185] Pension Contributions - The company expects to contribute approximately $51 million to multiemployer pension plans in fiscal 2025, subject to collective bargaining outcomes[182]

United Natural Foods is implementing a turnaround as the economy continues to grow. Heading into this week investors in North American food distributor United Natural Foods (UNFI 3.14%) didn't have much to cheer about. But a week containing positive news can make a big difference in a portfolio's returns. After the company surprised investors with its fiscal 2024 fourth-quarter results, the stock hit a level it hadn't seen since June of last year. After rocketing higher by as much as 27% this week, United N ...

Core Insights - United Natural Foods, Inc. (UNFI) reported strong fourth-quarter fiscal 2024 results, with revenues and earnings exceeding expectations and showing year-over-year growth [1][3] - The company has achieved four consecutive quarters of increasing profitability, driven by same-customer growth, an extended agreement with its largest customer, and efficiency initiatives [1][2] Financial Performance - Adjusted earnings for the quarter were 1 cent per share, surpassing the Zacks Consensus Estimate of a loss of 8 cents, compared to an adjusted loss of 25 cents in the same period last year [3] - Net sales increased by 10% year over year to $8,155 million, exceeding the Zacks Consensus Estimate of $7,874 million, with a $582 million gain attributed to an extra week in fiscal 2024 [4] - Excluding the impact of the additional week, sales grew by 2.1%, supported by improving unit volumes and inflation [4] Sales Growth by Channel - Year-over-year sales growth was observed across various channels: Chains (9%), Independent retailers (4.5%), Supernatural (18.6%), and Retail (3.1%), with Other channels rising by 9.6% [5] Profitability Metrics - Gross profit rose 15.5% year over year to $1.12 billion, with a gross margin of 13.7% for the fourth quarter, compared to 13% in the previous year [6] - Operating expenses were $1.08 billion, up from $1 billion in the prior year, but as a percentage of sales, they decreased to 13.2% from 13.5% [7] - Adjusted EBITDA increased by 53.8% to $143 million from $93 million in the year-ago quarter [7] Financial Health - Total liquidity stood at $1.28 billion as of August 3, 2024, with free cash flow reported at $71 million, down from $117 million in the prior year [8] - Total outstanding debt reached $2.06 billion, with a net debt to adjusted EBITDA leverage ratio of 4.0X [9] Future Guidance - For fiscal 2025, UNFI anticipates net sales between $30.3 billion and $30.8 billion, with adjusted EBITDA expected to be between $520 million and $580 million [9][10] - The company projects a net loss of $41 million to $3 million for fiscal 2025 and adjusted earnings between 20 cents and 80 cents [10] Stock Performance - Shares of UNFI have increased by 82.2% over the past three months, significantly outperforming the industry growth of 9% [11]

Group 1 - United Natural Foods Inc (UNFI) shares fell 4.01% to $21.08 on October 2, reaching an intraday low of $21.02, which is 8.94% below its 52-week high of $23.15 and 145.69% above its 52-week low of $8.58 [1] - The trading volume for UNFI was 704,307 shares, which is 97.6% of the average daily volume of 721,816 [1] Group 2 - Wall Street analysts have set an average one-year price target for UNFI at $16.71, indicating a downside of 20.71% from the current price of $21.08, with a high estimate of $23.00 and a low estimate of $12.00 [2] - The consensus recommendation from 12 brokerage firms gives UNFI an average rating of 3.1, indicating a "Hold" status on a scale where 1 is Strong Buy and 5 is Sell [2] - GuruFocus estimates the GF Value for UNFI at $40.29 in one year, suggesting an upside of 91.13% from the current price of $21.08 [2]

Core Viewpoint - United Natural Foods reported better-than-expected fourth-quarter earnings, including a surprise profit, leading to a significant increase in its stock price by 22.1% [1] Financial Performance - Revenue for the quarter increased by 10% to $8.16 billion, surpassing the consensus estimate of $7.94 billion, aided by an extra week in the calendar [2] - On a comparable 13-week basis, net sales rose by 2.1% [2] - Adjusted EBITDA grew by 53.8% to $143 million, which included a $10 million benefit from the extra week [3] Earnings Results - Adjusted earnings per share improved from a loss of $0.25 in the same quarter last year to a profit of $0.01, exceeding expectations of a loss of $0.10 per share [4] - The CFO highlighted the achievement of four consecutive quarters of increasing profitability, strengthening the company's foundation as it approaches fiscal 2025 [4] Future Outlook - United Natural Foods anticipates revenue between $30.3 billion and $30.8 billion for the upcoming fiscal year, reflecting a 1.5% decline at the midpoint compared to fiscal 2024, but essentially flat when adjusted for the extra week [4] - The projected adjusted EPS is between $0.20 and $0.80, compared to the consensus estimate of $0.57, indicating a cautious outlook despite the recent stock surge [5]

Financial Data and Key Metrics Changes - Fourth quarter sales reached $8.2 billion, benefiting from an extra week in the quarter, with a comparable 13-week basis growth of approximately 2.1% [19] - Adjusted EBITDA for the fourth quarter was $143 million, compared to $93 million in the previous year, marking the fourth consecutive quarter of sequentially higher profitability [24] - Free cash flow in Q4 was $71 million, enabling a reduction in net debt to under $2.1 billion and net leverage to 4.0 turns, a decline of 0.6 turns from Q3 [25] Business Line Data and Key Metrics Changes - Wholesale volumes improved, ending the year up 2%, primarily driven by the natural side of the business, while conventional volumes improved at a slower pace [20] - Retail sales saw a decline of slightly more than 4% compared to the prior year, attributed to lower same-store sales [21] - Gross margin rate, excluding LIFO, was 13.5% in Q4, with both wholesale and retail gross margin rates up compared to last year [22] Market Data and Key Metrics Changes - The natural and organic product segment grew around 5% in Q4 on a comparable 13-week basis compared to the prior year, with expectations for continued growth [5] - The market segment identified by the company totals over $90 billion in wholesale sales, expected to grow at a low single-digit rate over the long term [5] Company Strategy and Development Direction - The company is focused on a new strategy that emphasizes adding value through a differentiated portfolio of products and services, targeting a resilient market segment [6][7] - Plans include optimizing the distribution center network to lower costs and improve efficiency, with a capital investment reduction expected in fiscal 2025 [12][29] - The company aims for annual adjusted EBITDA growth in the high single-digit range over the next three years, with a target to reduce net leverage to 2.5 turns or less by fiscal year-end 2027 [15][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver and deleverage, focusing on helping customers succeed while managing costs tightly [52] - The outlook for fiscal 2025 includes expected sales in the range of $30.3 billion to $30.8 billion, with adjusted EBITDA projected to increase by 8% at the midpoint [28][29] - Management noted that while inflation remains a concern, they are focused on controlling internal factors to drive profitability [52] Other Important Information - The company has streamlined its organizational structure, reducing management layers to enhance decision-making speed [17] - A new fee structure for suppliers aims to simplify operations and improve collaboration, with early feedback indicating positive reception [49] Q&A Session Summary Question: Role of conventional in the portfolio - Management indicated that while natural products are a focus, conventional products still play a significant role in the overall strategy, with efforts to optimize the supply chain for efficiency [32] Question: Labor productivity and wage rate inflation - Management aims to offset wage rate inflation through productivity improvements and lean practices, focusing on increasing throughput in distribution centers [33] Question: Gross margin outlook for 2025 - Management expects a balance between benefits from shrink initiatives and pressures from customer mix, with vendor promotions not returning to pre-pandemic levels [36] Question: Retail segment demand trends - The retail business, particularly the Cub brand, is undergoing strategic improvements to enhance performance amidst competitive pressures [38] Question: Network optimization strategy - The strategy focuses on modernizing the distribution network to improve efficiency and customer service, with closures of legacy centers planned [48]

Financial Performance - Q4 FY24 - Net sales increased by 10% to $8,155 million, including approximately $582 million from an extra week, or 2.1% excluding the 53rd week impact[4, 5, 7] - Gross profit increased by 15.5% to $1,116 million, or 7% excluding the 53rd week[4] - Adjusted EBITDA increased by 53.8% to $143 million, including $10 million from the extra week, or 43% excluding the 53rd week[4, 5, 8] - Adjusted EPS increased from $(0.25) to $0.01, primarily driven by higher Adjusted EBITDA[4, 8] Financial Performance - FY24 - Net sales increased by 2.3% to $30,980 million, or 0.4% excluding the 53rd week[4] - Gross profit increased by 1.7% to $4,201 million, or 0.3% excluding the 53rd week[4] - Adjusted EBITDA decreased by 19.1% to $518 million, or 20.6% excluding the 53rd week[4] - Adjusted EPS decreased from $2.23 to $0.14[4] Future Outlook & Strategy - The company anticipates total sales will be roughly flat from FY25 to FY27 as organic growth offsets the revenue impact of network optimization focused on conventional network[6] - The company expects average annual adjusted EBITDA growth from FY25 to FY27 to be in the high-single digit range[6] - The company is targeting recurring free cash flow generation of around 0.5% or higher as a percentage of net sales[6] - The company expects to generate around $100 million in free cash flow in FY25, an increase of about $200 million from FY24[6] - The company is seeking to reduce net leverage to 2.5x or less by fiscal year end 2027[6, 9]