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- NYSE:USFD
Do US Foods Holding's (NYSE:USFD) Earnings Warrant Your Attention?
Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like US Foods Holding (NYSE:USFD). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.
Check out our latest analysis for US Foods Holding
How Fast Is US Foods Holding Growing Its Earnings Per Share?
In the last three years US Foods Holding's earnings per share took off; so much so that it's a bit disingenuous to use these figures to try and deduce long term estimates. So it would be better to isolate the growth rate over the last year for our analysis. US Foods Holding's EPS skyrocketed from US$1.86 to US$2.47, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 33%.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note US Foods Holding achieved similar EBIT margins to last year, revenue grew by a solid 6.1% to US$37b. That's progress.
In the chart below, you can see how the company has grown earnings and revenue, over time. Click on the chart to see the exact numbers.
Fortunately, we've got access to analyst forecasts of US Foods Holding's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.
Are US Foods Holding Insiders Aligned With All Shareholders?
We would not expect to see insiders owning a large percentage of a US$16b company like US Foods Holding. But we are reassured by the fact they have invested in the company. Given insiders own a significant chunk of shares, currently valued at US$57m, they have plenty of motivation to push the business to succeed. This should keep them focused on creating long term value for shareholders.
Should You Add US Foods Holding To Your Watchlist?
If you believe that share price follows earnings per share you should definitely be delving further into US Foods Holding's strong EPS growth. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in US Foods Holding's continuing strength. On the balance of its merits, solid EPS growth and company insiders who are aligned with the shareholders would indicate a business that is worthy of further research. It's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with US Foods Holding , and understanding this should be part of your investment process.
While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in the US with promising growth potential and insider confidence.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About NYSE:USFD
US Foods Holding
Engages in marketing, sale, and distribution of fresh, frozen, and dry food and non-food products to foodservice customers in the United States.
Proven track record with adequate balance sheet.
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