US Foods (USFD): Assessing Valuation After Strong Earnings, Guidance Raise, and Profitability Gains

US Foods Holding updated investors with a strong quarterly earnings report that topped expectations and raised its full-year outlook. This performance was driven by higher net sales and wider adjusted EBITDA margins across several end markets.

See our latest analysis for US Foods Holding.

US Foods Holding’s upbeat quarter and recent move to acquire Shetakis in Las Vegas have grabbed attention, but the stock’s momentum is a bit mixed. The share price sits at $73.48, delivering a 9.85% total shareholder return over the past year and a remarkable 144% over five years. At the same time, near-term price gains have cooled, which could indicate that investors are reassessing growth potential after a string of strong results.

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The question now is whether US Foods shares are undervalued after this run of strong results and positive guidance, or if the market has already factored future growth into the price. If so, there may be limited room for upside.

Most Popular Narrative: 20.5% Undervalued

With the narrative fair value set at $92.40 versus the last close of $73.48, market watchers see significant upside if forecasts hold. This gap has investors eager to know what's driving bullish analyst sentiment.

Analysts are assuming US Foods Holding's revenue will grow by 5.3% annually over the next 3 years. Analysts assume that profit margins will increase from 1.4% today to 2.5% in 3 years time.

Read the complete narrative.

Want to understand the math that powers this narrative target? There’s a bold growth play in the forecasts. Record profits and margin expansion are just the start. See which financial levers analysts believe will push US Foods to new highs.

Result: Fair Value of $92.40 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, structural shifts in consumer dining habits and integration risks from potential mergers could easily challenge the current upbeat outlook for US Foods.

Find out about the key risks to this US Foods Holding narrative.

Another View: Multiples Point to Caution

While some models suggest US Foods is undervalued, a quick look at its price-to-earnings ratio paints a different picture. The company trades at 29.4 times earnings, noticeably higher than the US Consumer Retailing industry average of 19.4 times and above its fair ratio of 28.5 times. This premium could signal added valuation risk if growth expectations slip. Are investors overpaying for recent momentum?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own US Foods Holding Narrative

If you see things differently or want a hands-on approach, dive into the data yourself and shape a narrative in just a few minutes, Do it your way

A great starting point for your US Foods Holding research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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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.

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