We Like The Quality Of US Foods Holding's (NYSE:USFD) Earnings

Explore US Foods Holding's Fair Values from the Community and select yours

Despite posting healthy earnings, US Foods Holding Corp.'s (NYSE:USFD ) stock has been quite weak. Our analysis suggests that there are some reasons for hope that investors should be aware of.

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How Do Unusual Items Influence Profit?

To properly understand US Foods Holding's profit results, we need to consider the US$159m expense attributed to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect US Foods Holding to produce a higher profit next year, all else being equal.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On US Foods Holding's Profit Performance

Unusual items (expenses) detracted from US Foods Holding's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that US Foods Holding's statutory profit actually understates its earnings potential! And on top of that, its earnings per share have grown at an extremely impressive rate over the last three years. The goal of this article has been to assess how well we can rely on the statutory earnings to reflect the company's potential, but there is plenty more to consider. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 1 warning sign for US Foods Holding and you'll want to know about this.

This note has only looked at a single factor that sheds light on the nature of US Foods Holding's profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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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.