Can United Natural (UNFI) Run Higher on Rising Earnings Estimates?
Zacks Investment Research | Oct 15, 2021 12:20AM ET
United Natural Foods (NYSE:UNFI) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
The upward trend in estimate revisions for this organic and specialty foods distributor reflects growing optimism of analysts on its earnings prospects, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance , with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
For United Natural, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
The earnings estimate of $0.78 per share for the current quarter represents a change of +52.94% from the number reported a year ago.
Over the last 30 days, one estimate has moved higher for United Natural while one has gone lower. As a result, the Zacks Consensus Estimate has increased 11.75%.
Current-Year Estimate Revisions
The company is expected to earn $4.08 per share for the full year, which represents a change of +5.15% from the prior-year number.
The revisions trend for the current year also appears quite promising for United Natural, with three estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 24.11%.
Favorable Zacks Rank
The promising estimate revisions have helped United Natural earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Get The News You Want
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom Line
While strong estimate revisions for United Natural have attracted decent investments and pushed the stock 20.3% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.
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