Shares of grocery and general merchandise products provider United Natural Foods (NASDAQ:UNFI) are down nearly 20% in the morning session today after concerns over the company’s profitability rattled investors.
For the fourth quarter, revenue rose 2% year-over-year to $7.4 billion but lagged estimates by $70 million. However, its net loss per share of $0.25 came in narrower than estimates by $0.14. UNFI is witnessing sales growth across its customer channels and working to drive operational efficiency.
Nevertheless, the company is experiencing a decrease in profitability owing to a decline in gains derived from inflation-driven procurement as well as a decline in volumes. The company expects these challenges to persist in the first half of Fiscal Year 2024.
As a result, UNFI’s financial outlook for the full Fiscal Year 2024, reflecting lower levels of anticipated procurement gains, failed to impress investors. The company now expects net sales for the year to hover between $30.9 billion and $31.5 billion. Adjusted EPS for the period is expected to land between -$0.88 and $0.38.
Is UNFI Stock a Good Buy?
With today’s price decline, UNFI shares have now plummeted nearly 51% over the past year. Wolfe Research’s Greg Badishkanian, the only analyst tracking UNFI, has reiterated a Buy rating on the stock alongside a $22 price target. This points to a nearly 45% potential upside in the stock.
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