UNFI 3Q21 Earnings Analysis


UNFI Stock Analysis

Business Description:

  • $140 billion potential market with currently $27 billion market and $38 billion existing customer opportunity

  • Major Competitors: SpartanNash (NASDAQ:SPTN), C&S Wholesales Groger and Kehe

  • Minor competitors (serves mostly to restaurants, schools and other small units): Sysco (NYSE:SYY) and US Food Holdings (NYSE:USFD)

  • Over 60 distribution centers (total 28.8 million sq ft) vs 19 for SPTN (8.2 million sq ft)

  • Diversified with moat in fast growing natural and organic

UNFI Stock Analysis
  • Customers:

  • Chains

  • Independent retailers

  • supernatural

  • retail

  • Largest customer: Whole Foods with about 18% of revenues in 2020

  • 6 product categories:

  • Grocery and general merchandise

  • Produce

  • Perishables and frozen foods

  • Nutritional supplements and sports nutrition

  • Bulk and food service products

  • Personal care items

  • 2 business segments

  • Wholesale

  • Retail


Catalysts:

  • Changing consumer habits into natural and organic

  • Deal with Amazon extended till 2027

  • Divestiture of retail business to raise capital for debt repayment

  • Inflation is a tailwind


Risks:

  • Took high debt for Supervalu acquisition with high interest payments

  • Depends on derivatives to handle debt repayments at lower interest rates