📉 UNFI Stock $UNFI crashed by 15% after disappointing earnings. The revenues were down 5.3% from the same quarter last year. The main reason is because last we had an exceptional year. In the third quarter of 2020 (February - April), we had the pandemic and start of the recession with a big demand in retailers. This increased the demand for UNFI and consequently their revenues and profits. But now things are back to normal. We should expect normal revenues and earnings.
⚠️ I made the mistake of overestimating the revenue and revenue growth of UNFI when calculating the intrinsic value. But it's okay since I used a 𝙢𝙖𝙧𝙜𝙞𝙣 𝙤𝙛 𝙨𝙖𝙛𝙚𝙩𝙮. That's an example of why the margin of safety is so important. You're going to make mistakes but as long as they are within the margin of safety, there won't be any bad consequences.
The market is also worried about the debt of UNFI which they took to acquire Supervalu in 2018. As I've shown before, even in the worst-case scenario where UNFI loses their largest customer Whole Foods $AMZN , they can still repay all their debt with the cash flow they are generating.
The fundamentals for UNFI did not change. They are still a value stock.
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Full analysis of UNFI:
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