US Foods (USFD) could be a solid choice for investors given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.Since a changing e ...

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.Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and ...

Group 1: Momentum Investing Overview - Momentum investing contrasts with the traditional "buy low and sell high" strategy, focusing instead on "buying high and selling higher" to capitalize on fast-moving stocks [1] - Identifying the right entry point for momentum stocks can be challenging, as they may lose momentum if their valuations exceed future growth potential [1] Group 2: Investment Strategy - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [2] - The 'Fast-Paced Momentum at a Bargain' screen helps in spotting fast-moving stocks that remain attractively priced [2] Group 3: US Foods (USFD) Analysis - US Foods (USFD) has shown a price increase of 3.8% over the past four weeks, indicating growing investor interest [3] - The stock gained 10% over the past 12 weeks, demonstrating its ability to deliver positive returns over a longer timeframe [4] - USFD has a beta of 1.66, suggesting it moves 66% more than the market in either direction, indicating fast-paced momentum [4] - The stock has a Momentum Score of B, suggesting it is an opportune time to invest [5] - USFD has earned a Zacks Rank 2 (Buy) due to upward trends in earnings estimate revisions, which attract more investor interest [6] - The stock is trading at a Price-to-Sales ratio of 0.40, indicating it is relatively cheap, as investors pay only 40 cents for each dollar of sales [6] Group 4: Additional Investment Opportunities - Besides USFD, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting additional investment opportunities [7] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [8]

Core Viewpoint - Investors in US Foods Holding Corp. (USFD) should closely monitor the stock due to significant movements in the options market, particularly the high implied volatility of the Dec 20, 2024 $22.50 Put option [1] Company Analysis - US Foods is currently rated as Zacks Rank 3 (Hold) within the Food-Miscellaneous industry, which ranks in the bottom 38% of the Zacks Industry Rank [3] - Over the past 60 days, two analysts have raised their earnings estimates for the current quarter, while one has lowered theirs, resulting in a flat Zacks Consensus Estimate of 78 cents per share for the current quarter [3] Options Market Insights - The high implied volatility surrounding US Foods suggests that options traders are anticipating a significant price movement, which could indicate an upcoming event that may lead to a substantial rally or sell-off [2][4] - Seasoned options traders often seek out options with high implied volatility to sell premium, aiming to benefit from the decay of the option's value if the underlying stock does not move as much as expected by expiration [4]

Financial Data and Key Metrics - Adjusted EBITDA grew by 13% YoY, with a 27 basis point expansion in adjusted EBITDA margin to 4.7% [8][22] - Adjusted diluted EPS increased by 21.4% to $0.85, driven by strong free cash flow deployment towards share repurchases [24] - Net sales increased by 6.8% to $9.7 billion, driven by a 3.8% growth in total case volume and a 3% impact from food cost inflation and mix [22] - Free cash flow for the first nine months of the year was $658 million, supported by disciplined working capital management [26] Business Line Performance - Independent restaurant case volume grew by 4.1%, marking the 14th consecutive quarter of market share gains [8][22] - Healthcare volume growth remained strong at 5.7%, while hospitality growth accelerated to 3% [22] - Pronto, the small truck delivery service, is now live in 40 markets and is expected to deliver nearly $700 million in annualized sales this year [16] Market Performance - The Southeast region experienced a nearly 100-basis point headwind to independent volume growth due to hurricane impacts [10] - Excluding the Southeast, organic independent volume growth was modestly higher than the second quarter growth rate [10] - Monthly foot traffic was down approximately 3.5% for the third quarter but improved sequentially throughout the quarter [10] Strategic Initiatives and Competitive Positioning - The company is focused on four strategic pillars: culture, service, growth, and profit [12][14][16][18] - Descartes Routing technology is now live in 15 markets, with plans to expand to 11 more by year-end, improving distribution productivity [14] - The company is actively exploring strategic alternatives for its CHEF'STORE business and has begun discussions with potential buyers [19] Management Commentary on Operating Environment and Outlook - Management highlighted the challenging macro environment and hurricane impacts but expressed confidence in the company's ability to control controllable factors [8] - The company updated its 2024 guidance, expecting net sales of $37.7 billion to $38 billion, adjusted EBITDA of $1.72 billion to $1.74 billion, and adjusted diluted EPS of $3.05 to $3.15 [29] - Management remains confident in achieving the 2025-2027 long-range plan, which includes a 5% sales growth CAGR, 10% adjusted EBITDA growth CAGR, and 20% adjusted diluted EPS growth CAGR [33] Other Important Information - The company repurchased $580 million worth of shares in Q3 and an additional $160 million in Q4, with $238 million remaining under its $1 billion share repurchase program [9][27] - The company issued $500 million in senior notes due 2033 at 5.75% to address debt maturities and capture $9 million in annualized interest savings [28] Q&A Session Summary Question: Private Label Penetration and Independent Restaurant Trends - Private label penetration is at 52%, with strong adoption across customer types, particularly independent restaurants [35] - Independent restaurant case growth accelerated by over 100 basis points after hurricane impacts subsided, with similar improvements in chain and healthcare volumes [36] Question: Guidance and P&L Performance - The company is guiding to the high end of its full-year EBITDA range, driven by strong execution across the P&L, including gross profit expansion and operating expense productivity [38][39] Question: Salesforce Growth and Productivity - Salesforce growth is running in the mid-single digits, with strong new account generation and some green shoots in penetration trends [42] - Warehouse productivity improved by 3.5%, with further gains expected as the company continues to roll out UMass technology [44][45] Question: COGS Initiatives and Vendor Collaboration - The company expects to deliver $230 million in COGS savings from 2022-2024, with strong vendor collaboration supporting future savings [49][50] Question: Healthcare and Hospitality Pipeline - The healthcare and hospitality pipelines remain strong, with $100 million in annualized sales onboarded during the quarter [51][52] Question: Descartes Rollout and Hospitality Demand - The Descartes rollout is progressing well, with half of the company's miles expected to be on the system by year-end [54] - Hospitality demand was impacted by hurricanes but showed improvement as the quarter progressed [55] Question: Case Growth and Share Repurchase Cadence - Total case growth for 2024 is now expected to be 4%-4.5%, with hurricane impacts and softer foot traffic contributing to the adjustment [57][58] - Share repurchases are expected to be front-end loaded, with the company toggling between M&A and buybacks based on opportunities [63][64] Question: Pronto Business and Productivity Gains - Pronto is expected to contribute $700 million in annualized sales, with 20% of that being incremental [78] - Productivity gains are expected to continue within the 3%-5% range, driven by supply chain and administrative efficiencies [71] Question: Salesforce Compensation and Indirect Cost Savings - Salesforce compensation changes have been well-received, with increased variable pay driving desired performance outcomes [73][74] - The company is on track to achieve $60 million in indirect cost savings by 2027 [75] Question: Local Case Volume Assumptions - The company remains confident in its ability to achieve 5%-8% case growth, even if market growth is in the 1%-2% range [85][86]

US Foods (USFD) came out with quarterly earnings of $0.85 per share, beating the Zacks Consensus Estimate of $0.82 per share. This compares to earnings of $0.70 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 3.66%. A quarter ago, it was expected that this company would post earnings of $0.94 per share when it actually produced earnings of $0.93, delivering a surprise of -1.06%.Over the last four quarters, the company has surp ...

Financial Data and Key Metrics Changes - In Q2 2024, net sales increased by 7.7% to $9.7 billion, driven by total case volume growth of 5.2% and food cost inflation of 2.9% [17] - Adjusted EBITDA grew by 13.2% to a record $489 million, with an adjusted EBITDA margin expanding by 25 basis points to an all-time high of 5% [18] - Adjusted EPS increased by 17.7% to $0.93, continuing to grow at a faster rate than adjusted EBITDA [18] Business Line Data and Key Metrics Changes - Independent restaurant volume grew by 5.7%, including 250 basis points from acquisitions, marking the 13th consecutive quarter of market share gains [17] - Healthcare growth remained strong at 6%, while hospitality growth improved to 2.1% due to successful onboarding of new business [18] - Adjusted gross profit increased by 8% to $1.7 billion, with private label brands growing to over 52% penetration with independent customers [13][18] Market Data and Key Metrics Changes - Restaurant foot traffic was down approximately 3% during Q2 2024, impacting overall market dynamics [8] - Despite the headwinds, the company captured profitable market share, particularly in independent restaurants [8] - The company expects to exceed its 1.5 times market growth goal for restaurants for the full year [12] Company Strategy and Development Direction - The company aims to become the undisputed best in the industry, focusing on safety, growth, profitability, and digital leadership [5] - A financial algorithm for 2025 through 2027 was laid out, targeting 5% CAGR in sales, 10% CAGR in adjusted EBITDA, and 20% annual growth in adjusted diluted EPS [6] - The company is committed to deploying over $4 billion of capital, with approximately half allocated for share repurchases [6] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a softer macro environment but expressed confidence in achieving the 2% to 4% organic case volume target for the year [28] - The company remains focused on controlling internal factors to drive growth despite external challenges [28] - Management expects continued strong performance in healthcare and hospitality sectors, with a robust pipeline of new business [30] Other Important Information - The company has authorized a $1 billion share repurchase program, with $21 million repurchased in June and approximately $61 million in Q3 to date [22] - The company is exploring strategic alternatives for CHE'STORE, emphasizing support for the business and its associates during the process [14] Q&A Session Summary Question: Can you elaborate on end demand and customer type evolution? - Management expressed confidence in achieving the 2% to 4% case growth target despite a softer macro environment, noting lower foot traffic but continued growth in healthcare and hospitality [28][30] Question: What adjustments are being made to the business in the current backdrop? - Adjustments include modifications to the TM compensation plan to incentivize aggressive growth and a focus on driving private label brand growth [31] Question: Can you provide insights on market share gains and competition? - Management confirmed 13 consecutive quarters of market share gains, supported by third-party data, and emphasized the ability to generate new accounts despite macro challenges [36][37] Question: How is the company addressing increased promotional activity in the market? - Management acknowledged increased promotional activity but stated it has not hindered their growth, highlighting their own promotional strategies [47] Question: What is the outlook for hospitality growth in the back half of the year? - Management expects continued strengthening in hospitality growth, supported by a strong pipeline of new business [45] Question: Can you provide an update on the MOXe platform adoption? - MOXe is fully rolled out across independent restaurants, with customers buying 10% more on average, and it is aiding in private label penetration [68][69]

US Foods (USFD) came out with quarterly earnings of $0.93 per share, missing the Zacks Consensus Estimate of $0.94 per share. This compares to earnings of $0.79 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of -1.06%. A quarter ago, it was expected that this company would post earnings of $0.53 per share when it actually produced earnings of $0.54, delivering a surprise of 1.89%. Over the last four quarters, the company has sur ...

Financial Data and Key Metrics Changes - First quarter net sales increased by 4.8% to $8.9 billion, driven by total case volume growth of 4.2% and food cost inflation of 1.5% [9] - Adjusted EBITDA grew by 5.6% from the prior year to $356 million, slightly above the high end of guidance, despite a $20 million negative impact from labor disruptions and weather-related issues [149][128] - Adjusted gross profit grew nearly 7% to $1.5 billion, with adjusted EBITDA margin remaining largely unchanged at 4% [125][128] Business Line Data and Key Metrics Changes - Independent restaurant volume increased by 4.6% overall and 2.9% organically, while health care and hospitality grew by 6.4% and 0.9%, respectively [9] - The company achieved a record in cases per mile in February and March, with a 4% improvement in cases per mile compared to Q1 2023 [6] - Private label penetration increased by 90 basis points year-over-year to over 52% [26] Market Data and Key Metrics Changes - Despite a slight year-over-year decrease in restaurant foot traffic, broadliners increased their volume within the overall food service distribution channel, indicating industry resilience [23] - The company expects hospitality to accelerate through Q2 and the second half of the year as new customers are onboarded [9][47] Company Strategy and Development Direction - The company is focused on accelerating profitable growth and gaining market share, aiming for 1.5x market growth for restaurants in 2024 [119] - Continued investments in operational rigor and technology modernization are expected to enhance service levels and delivery efficiency [24][117] - The Pronto small truck delivery service is positioned as a competitive differentiator, with expectations of approximately $600 million in annualized sales [152] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the macro environment but expressed confidence in the company's ability to control outcomes and gain profitable market share [33][30] - The company remains focused on executing its strategy and maintaining disciplined capital deployment to drive long-term shareholder value [131] - Management expects adjusted EBITDA for fiscal year 2024 to be in the range of $1.69 billion to $1.74 billion, reaffirming guidance despite a softer macro environment [130] Other Important Information - The company repurchased $13 million of shares during the first quarter, with plans to increase share repurchases through the remainder of the year [11][23] - The company is set to host an Investor Day on June 5, where it will share long-range plan targets [3][31] Q&A Session Summary Question: Impact of softer traffic environment on internal targets - Management noted that while there have been challenges, the company has opportunities to focus on controllable factors like gaining profitable market share [33] Question: Growth expectations in health care and hospitality - Management expects hospitality to accelerate in Q2 and the second half of the year, driven by onboarding new customers [47] Question: Size of sales force and impact on share gains - Management believes that a low to mid-single-digit addition to the sales force is appropriate and will not hinder growth [41] Question: Performance of CHEF STORE in the current macro backdrop - CHEF STORE has returned to case growth, and the company plans to continue adding stores [60] Question: Increase in private label penetration - The increase is attributed to a combination of factors, including improved sales force confidence and compensation changes [65] Question: M&A outlook and impact on guidance - Management indicated that while IWC will contribute to growth, they do not need to pursue additional M&A aggressively at this time [145]

Disclaimer Page We report our financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). However, this presentation includes the following non-GAAP financial measures: Adjusted Gross profit, Adjusted Operating expenses, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net income, Adjusted Diluted Earnings Per Share (EPS), Net Debt and Net Leverage Ratio. These non-GAAP financial measures exclude the impact of certain items and, therefore, have not been calculated i ...