The firm sited weak third quarter 2015 results.
On Monday, the North American organic food distributor reported net income of $41.8 million, or 78 cents per diluted share, on revenue of $2.11 billion.
Analysts on average were expecting the company to report earnings of 86 cents per share on revenue of $2.14 billion.
However, several positive developments include the company's announcement of two new West-Coast customer wins highlighting the strength of its combined offering with Tony's product and that the company's net inflation is trending more expected than analysts had expected, according to the firm's note.
Shares are gaining 0.58% to $61.09.
Separately, TheStreet Ratings team rates UNITED NATURAL FOODS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate UNITED NATURAL FOODS INC (UNFI) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 18.7%. 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 13.7% 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. During the past fiscal year, UNITED NATURAL FOODS INC increased its bottom line by earning $2.52 versus $2.18 in the prior year. This year, the market expects an improvement in earnings ($2.93 versus $2.52).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Food & Staples Retailing industry average. The net income increased by 14.7% when compared to the same quarter one year prior, going from $36.39 million to $41.75 million.
- Net operating cash flow has significantly increased by 207.72% to $46.71 million when compared to the same quarter last year. In addition, UNITED NATURAL FOODS INC has also vastly surpassed the industry average cash flow growth rate of -25.70%.
- The current debt-to-equity ratio, 0.41, 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.
- You can view the full analysis from the report here: UNFI Ratings Report