Q3 Earnings Preview for US Foods (NYSE:USFD)

in EARNINGS/INVESTING IDEAS by

US Foods Holding Corp. (NYSE:USFD) is scheduled to report Q3 earnings results on November 2, 2020.

The company is expected to report earnings of $0.17/share on revenue of $5.91 billion. The consensus earnings per share (EPS) of $0.17/share is based on a poll of 9 analysts and represents a decline in eps of −72.3% over the same quarter last year, when the company reported earnings of $0.61/share.

The revenue forecast of $5.91 billion based on a poll of 6 analysts implies a year-over-year (YoY) decline in revenue of −9.5%. Last year the company reported $6.531 billion in revenue for the quarter.

Expected to report EPS contraction of −72.3% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $5,909.59 $6,531.00 −9.5%
EPS $0.17 $0.61 −72.3%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and missed expectations 3 quarters.

What are your expectations from US Foods Holding Corp. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.35 -$0.25 27.7% Beat
Q1, 2020 $0.16 $0.15 −3.4% Missed
Q4, 2019 $0.65 $0.66 0.9% Beat
Q3, 2019 $0.61 $0.61 −0.3% Missed
Q2, 2019 $0.63 $0.64 1.3% Beat
Q1, 2019 $0.36 $0.37 4.1% Beat
Q4, 2018 $0.59 $0.56 −4.7% Missed
Q3, 2018 $0.51 $0.55 8.5% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 27, 2020, the stock price reacted by increasing 9.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $20.12 $21.95 9.1% Increase
May 5, 2020 $19.94 $18.29 −8.3% Decline
February 11, 2020 $40.74 $40.47 −0.7% Decline
November 5, 2019 $40.23 $40.57 0.8% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.08, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.08 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

US Foods Holding Corp. is currently trading at $23.44/share, down −7.3% for the day. The company is trading at approximately 55.2% of its 52-week high of $42.43/share. The company’s stock price is up 6.8% since the last earnings report and down −6.1% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 45.22 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:USFD Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −166.83 and a forward P/E multiple of 52.66.

US Foods Holding Corp.’s current share price also implies a price-to-book (P/B) multiple of 1.48. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 27, 2020
Stock Price (Current) $23.44
P/E Ratio −166.8x
P/E Ratio (Fwd) 52.7x
PEG Ratio 1.7
Total Debt / Total Capital 52.3%
Levered Free Cash Flow $857 million
EV / EBITDA 12.8x

Finbox

US Foods Holding Corp. is a mid-cap stock with a market capitalization of $5.172 billion and a total enterprise value of $10.664 billion. The company operates in the Consumer Staples sector and the Food & Staples Retailing industry.

US Foods Holding Corp., through its subsidiary, US Foods, Inc., markets and distributes fresh, frozen, and dry food and non-food products to foodservice customers in the United States. The company’s customers include independently owned single and multi-unit restaurants, regional concepts, national restaurant chains, hospitals, nursing homes, hotels and motels, country clubs, government and military organizations, colleges and universities, and retail locations. As of February 13, 2020, it maintained 92 operating facilities. The company was formerly known as USF Holding Corp. and changed its name to US Foods Holding Corp. in February 2016. US Foods Holding Corp. was incorporated in 2007 and is headquartered in Rosemont, Illinois.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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