Trade-Ideas LLC identified

United Natural Foods

(

UNFI

) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified United Natural Foods as such a stock due to the following factors:

  • UNFI has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $36.4 million.
  • UNFI has traded 297,902 shares today.
  • UNFI traded in a range 210.6% of the normal price range with a price range of $2.70.
  • UNFI traded below its daily resistance level (quality: 27 days, meaning that the stock is crossing a resistance level set by the last 27 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on UNFI:

United Natural Foods, Inc., together with its subsidiaries, distributes and retails natural, organic, and specialty foods, as well as non-food products primarily in the United States and Canada. UNFI has a PE ratio of 19. Currently there are 4 analysts that rate United Natural Foods a buy, 2 analysts rate it a sell, and 7 rate it a hold.

The average volume for United Natural Foods has been 873,600 shares per day over the past 30 days. United Natural has a market cap of $2.5 billion and is part of the services sector and wholesale industry. The stock has a beta of 0.96 and a short float of 10.5% with 6.68 days to cover. Shares are down 35.1% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates United Natural Foods as a

hold

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, poor profit margins and weak operating cash flow.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 4.4%. Since the same quarter one year prior, revenues rose by 16.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • UNITED NATURAL FOODS INC has improved earnings per share by 7.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, UNITED NATURAL FOODS INC increased its bottom line by earning $2.76 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($2.92 versus $2.76).
  • The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.93 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has decreased to $55.06 million or 33.71% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Food & Staples Retailing industry and the overall market, UNITED NATURAL FOODS INC's return on equity is below that of both the industry average and the S&P 500.

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