Loading...

United Natural Foods

Nasdaq:UNFI
Snowflake Description

Excellent balance sheet and good value.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
UNFI
Nasdaq
$2B
Market Cap
  1. Food and Staples Retailing
Company description

United Natural Foods, Inc., together with its subsidiaries, distributes natural, organic, and specialty foods and non-food products in the United States and Canada. More info.


Add to Portfolio Compare Print Invest
SHARE PRICE
3 Month History
UNFI
Industry
5yr Volatility vs Market

Value

 Is United Natural Foods undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of United Natural Foods to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

How is this discounted cash flow calculated?

Current Discount
Amount off the current price United Natural Foods is available for.
Intrinsic value
35%
Share price is $42.63 vs Future cash flow value of $65.2
Current Discount Checks
For United Natural Foods to be considered undervalued it must be available for at least 20% below the current price. Less than 40% is even better.
  • United Natural Foods's share price is below the future cash flow value, and at a moderate discount (> 20%).
  • United Natural Foods's share price is below the future cash flow value, but not at a substantial discount (< 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for United Natural Foods's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are United Natural Foods's earnings available for a low price, and how does this compare to other companies in the same industry?
  • United Natural Foods is good value based on earnings compared to the US Food and Staples Retailing industry average.
  • United Natural Foods is good value based on earnings compared to the US market.
Price based on expected Growth
Does United Natural Foods's expected growth come at a high price?
  • United Natural Foods is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on United Natural Foods's assets?
  • United Natural Foods is good value based on assets compared to the US Food and Staples Retailing industry average.
X
Value checks
We assess United Natural Foods's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Food and Staples Retailing industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Food and Staples Retailing industry average (and greater than 0)? (1 check)
  5. United Natural Foods has a total score of 4/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (5%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (2 Stage Free Cash Flow to Equity)

The calculations below outline how an intrinsic value for United Natural Foods is arrived at by discounting future cash flows to their present value. We use analyst's estimates of cash flows going forward 5 years.

See our documentation to learn about this calculation.

5 year cash flow forecast

Present value of next 5 years cash flows:
$708

Terminal Value

Terminal Value = FCF2021 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = $230 × (1 + 2.47%) ÷ (8.49% – 2.47%)

Terminal value based on the Perpetuity Method where growth (g) = 2.47%:
$3,916

Present value of terminal value:
$2,605

Equity Value

Equity Value (Total value) = Present value of next 5 years cash flows + terminal value
$3,313 = $708 + $2,605

Value = Total value / Shares Outstanding ($3,313 / 51)

Discount to Share Price

Value per share:
$65.2

Current discount (share price of $42.63): 34.62%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 8.49% = 2.47% + (0.8 * 7.53%)



Estimate of Bottom Up Beta

The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value ($2,166,298,357).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

0.623 = 0.554 (1 + (1- 30%) (17.81%))

Levered Beta used in calculation = 0.8



Assumptions
  1. The risk free rate of 2.47% is from the 10 year government bond rate in USD.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (7.53%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is United Natural Foods expected to perform in the next 1 to 3 years based on estimates from 17 analysts?

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
7%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is United Natural Foods expected to grow at an attractive rate?
  • United Natural Foods's earnings growth is expected to exceed the low risk savings rate of 3.6%.
Growth vs Market Checks
  • United Natural Foods's earnings growth is positive but not above the US market average.
  • United Natural Foods's revenue growth is positive but not above the US market average.
Annual Growth Rates Comparison
Analysts growth expectations
Super high growth metrics
High Growth Checks
  • United Natural Foods's earnings are expected to grow by 7% yearly, however this is not considered high growth (20% yearly).
  • United Natural Foods's revenue is expected to grow by 5% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • United Natural Foods is not expected to perform strongly, Return on Equity (ROE) in 3 years is estimated to be below 20%.

Improvement & Relative to industry
  • Performance (ROE) is expected to be below the current US Food and Staples Retailing industry average.
  • A decline in United Natural Foods's performance (ROE) is expected over the next 3 years.
X
Future performance checks
We assess United Natural Foods's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the US market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the US market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
United Natural Foods has a total score of 1/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

  How has United Natural Foods performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare United Natural Foods's growth in the last year to its industry (Food and Staples Retailing).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • United Natural Foods's year on year earnings growth rate has been positive on average over the past 5 years.
  • United Natural Foods's 1 year earnings growth is less than its 5 year annual average (3.5% vs 9.1%)
  • United Natural Foods's earnings growth has exceeded the US Food and Staples Retailing industry average in the past year (3.5% vs -1.4%).
Earnings and Revenue History
United Natural Foods's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Poor return on shareholders funds (ROE < 20%) last year.
  • United Natural Foods performed above the US Food and Staples Retailing industry average based on Return on Assets (ROA) last year.
  • Performance based on Return on Capital Employed (ROCE) has been diminishing over 3 years.
X
Past performance checks
We assess United Natural Foods's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Food and Staples Retailing industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
United Natural Foods has a total score of 3/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is United Natural Foods's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up United Natural Foods's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • United Natural Foods is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • United Natural Foods's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of United Natural Foods's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • High level of stock/ inventory/ unsold assets.
  • Total debt is covered by total short term assets, assets are 4.3x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • United Natural Foods's level of debt (22.9% of total debt) compared to net worth is satisfactory (less than 40%).
  • The level of debt compared to net worth has increased over the past 5 years (11.9% vs 22.9% today).
  • Total debt is well covered by annual operating cash flow (72.8%, greater than 20% of total debt).
  • Interest on debt is well covered by earnings (EBIT is 13.9x coverage).
X
Financial health checks
We assess United Natural Foods's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. United Natural Foods has a total score of 5/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is United Natural Foods's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
0%
Current annual income from United Natural Foods dividends.
If you bought $2,000 of United Natural Foods shares you are expected to receive $0 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Not paying a dividend.
  • Not paying a dividend.
Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Not paying a notable dividend.
  • Not paying a notable dividend.
Current Payout to shareholders
What portion of United Natural Foods's earnings are paid to the shareholders as a dividend.
  • Not paying a notable dividend.
Future Payout to shareholders
  • Insufficient estimate data to determine if a dividend will be paid in 3 years.
X
Income/ dividend checks
We assess United Natural Foods's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can United Natural Foods afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. United Natural Foods has a total score of 0/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of United Natural Foods's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Steve Spinner, image provided by Google.
Steve Spinner
COMPENSATION $13,996,747
AGE 57
TENURE AS CEO 9.2 years
CEO Bio

Mr. Steven L. Spinner, also known as Steve, has been the Chief Executive Officer and President of United Natural Foods, Inc. (UNFI) since September 2008. Mr. Spinner served as the President of Performance Food Group Co., from May 25, 2005 to October 2006. He served as Chief Executive Officer of Performance Food Group Co. from October 1, 2006 to June 2008 and its Chief Operating Officer from May 25, 2005 to September 2006 and Senior Vice President from February 2002 to May 2005. He served as Chief Executive Officer for Broadline Segment of Performance Food Group Co., from February 2002 to May 2005 and also served as President of its Broadline Distribution from October 2001 to June 2005 and Northeast Regional President of its broadline segment from November 2000 to October 2001. He served as Broadline Regional President of Performance Food Group Co., from October 2000 to August 2001. Mr. Spinner served as President of AFI Food Service Distributors Inc. (AFI), a wholly-owned subsidiary of Performance Food Group Co., from October 1997 to October 2001 and Principle from 1985 to October 1997. From 1989 to October 1997, Mr. Spinner served as Vice President of AFI Food service. He has been Chairman of the Board of United Natural Foods, Inc. since December 15, 2016 and has been its Director since September 2008. He has been an Independent Director and Lead Independent Director of ArcBest Corporation (alternate name Arkansas Best Corporation) since July 21, 2011 and April 2016 respectively. He served as a Director of Performance Food Group Co., LLC from October 2006 to May 2008.

CEO Compensation
  • Steve's compensation has increased by more than 20% in the past year.
  • Steve's compensation is higher than average for a company of this size and profit level.
Management Team Tenure

Average tenure and age of the United Natural Foods management team in years:

3
Average Tenure
53.6
Average Age
  • The tenure for the United Natural Foods management team is about average.
Management Team

Steve Spinner

TITLE
Chairman
COMPENSATION
$14M
AGE
57
TENURE
9.2 yrs

Mike Zechmeister

TITLE
Chief Financial Officer
COMPENSATION
$4M
AGE
50
TENURE
2.1 yrs

Sean Griffin

TITLE
Chief Operating Officer
COMPENSATION
$4M
AGE
58
TENURE
3.2 yrs

Eric Dorne

TITLE
Chief Administrative & Information Officer
COMPENSATION
$2M
AGE
56
TENURE
1.2 yrs

Paul Green

TITLE
President of Pacific Region
COMPENSATION
$2M
AGE
55
TENURE
1.3 yrs

Halie O'Shea

TITLE
Director of Investor Relations and Corporate Strategy
AGE
45
TENURE
1.4 yrs

Joseph Traficanti

TITLE
Senior VP
COMPENSATION
$1M
AGE
66
TENURE
8.6 yrs

Danielle Benedict

TITLE
Chief Human Resource Officer
AGE
44
TENURE
0.2 yrs

Craig Smith

TITLE
Senior Vice President of Fresh Sales
COMPENSATION
$1M
AGE
58
TENURE
1.3 yrs

Chris Testa

TITLE
President of Atlantic Region
AGE
47
TENURE
1.3 yrs
Board of Directors Tenure

Average tenure and age of the United Natural Foods board of directors in years:

5.9
Average Tenure
58
Average Age
  • The tenure for the United Natural Foods board of directors is about average.
Board of Directors

Steve Spinner

TITLE
Chairman
COMPENSATION
$14M
AGE
57
TENURE
0.9 yrs

James Heffernan

TITLE
Lead Independent Director
COMPENSATION
$322K
AGE
71
TENURE
2.1 yrs

Peter Roy

TITLE
Independent Director
COMPENSATION
$226K
AGE
61
TENURE
10.4 yrs

Ann Bates

TITLE
Independent Director
COMPENSATION
$261K
AGE
59
TENURE
4.1 yrs

Michael Funk

TITLE
Director
COMPENSATION
$499K
AGE
63
TENURE
21.8 yrs

Denise Clark

TITLE
Independent Director
COMPENSATION
$238K
AGE
59
TENURE
4.8 yrs

Eric Artz

TITLE
Independent Director
COMPENSATION
$218K
AGE
50
TENURE
2.1 yrs

Daphne Dufresne

TITLE
Director
COMPENSATION
$260K
AGE
44
TENURE
1.1 yrs
Recent Insider Trading
  • United Natural Foods insiders have only sold shares in the past 3 months.
Who owns this company?
X
Management checks
We assess United Natural Foods's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. United Natural Foods has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Map
Description

United Natural Foods, Inc., together with its subsidiaries, distributes natural, organic, and specialty foods and non-food products in the United States and Canada. The company operates through three divisions: Wholesale, Retail, and Manufacturing and Branded Products. The Wholesale division offers grocery and general merchandise, produce, perishables and frozen foods, nutritional supplements and sports nutrition, bulk and foodservice products, and personal care products. This segment also distributes an array of specialty protein, cheese, deli, food service, and bakery goods; and organic and conventional produce and non-produce perishable items, and natural and organic specialty and gourmet ethnic products, as well as vitamins and minerals. The Retail division operates 12 natural products retail stores in Florida, Maryland, Massachusetts, and Rhode Island. The Manufacturing and Branded Products division is involved in importing, roasting, packaging, and distributing nuts, dried fruits, seeds, trail mixes, granola, natural and organic snack items, and confections. This segment also provides Blue Marble Brands products on wholesale basis through third-party distributors in organic, natural, and specialty food brands, as well as directly to retailers; and Field Day brand products primarily to customers through its independent natural products retailer channel. The company serves independently owned natural products retailers, supernatural chains, conventional supermarkets, and mass market chains, as well as foodservice, e-commerce, and international customers outside Canada. United Natural Foods, Inc. was founded in 1976 and is headquartered in Providence, Rhode Island.

Details
Name: United Natural Foods, Inc.
Ticker: UNFI
Exchange: NasdaqGS
Founded: 1976
Market Cap: $2,166,298,357
Shares outstanding: 50,816,288
Website: http://www.unfi.com
Address: United Natural Foods, Inc.
313 Iron Horse Way,
Providence,
Rhode Island, 02908,
United States
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
NasdaqGS UNFI Common Stock Nasdaq Global Select US USD 01. Nov 1996
DB UN3 Common Stock Deutsche Boerse AG DE EUR 01. Nov 1996
Number of employees
Current staff
Staff numbers
9,700
United Natural Foods employees.
Industry
Industry: Food Distributors
Sector: Food and Staples Retailing