Company description united natural foods inc is the

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COMPANY DESCRIPTION United Natural Foods Inc. is the largest wholesale distributor to the natural, organic and specialty food industry in the U.S. and Canada. UNFI’s customers include natural and conventional supermarket chains, independent health food retailers, and businesses in the foodservice sector. VALUATION We think that UNFI shares are attractively valued at current prices near $40. The shares are trading near the midpoint of their 52-week range of $29-$53. On the fundamentals, the shares are trading at 12.3-times our FY18 EPS estimate, near the low point of the five-year range of 12-25 and below the average multiple of 15 for a peer group that includes Sysco Corp., Anderson’s Inc., Performance Food Group, and U.S. Foods Holding Corp. They are also trading at a price/sales multiple of 0.75, above the five-year range of 0.2-0.6 and above the peer average of 0.3. The price/book ratio is 1.1, toward the low end of the historical range of 1.0-3.4 and below the peer average of 4.8. The price/cash flow ratio is negative compared to the peer average of 13.1. We continue to believe that the stock merits higher multiples given the company’s improving growth prospects and ability to successfully integrate acquisitions. Our target price of $51 implies a valuation closer to industry averages. On June 8 at midday, BUY-rated UNFI traded at $39.56, down $0.02. (Deborah Ciervo, CFA 6/8/18)
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M ARKET U PDATE - 10 - HAIN CELESTIAL GROUP INC. (NGS: HAIN, $27.97) ........................................... HOLD HAIN: Reiterating HOLD following rough 3Q * On May 8, Hain reported fiscal 3Q18 adjusted diluted EPS rose to $0.37 from $0.35 a year earlier, but missed the consensus forecast by $0.10. Net sales of $632.72 million rose 8% on a reported basis and 2% in constant currency, but missed the consensus by $114 million. * The company announced in March that its board approved a plan to sell Hain Pure Protein, a non-core business which includes the Plainville Farms, Empire Kosher and FreeBird brands. The segment is now reported as discontinued operations. * Activist investor Engaged Capital recently increased its stake in Hain to 11.1%. We continue to believe it could lead to the sale of all or part of the company. Hain shares jumped in late November following reports of preliminary discussions with Nestle, however sunk more than 34% year-to-date. * Along with the 3Q results, management lowered its 2018 full year guidance, which now excludes Hain Pure Protein, and includes higher costs. It continues to project a 4%-6% increase in net sales, to $2.434- $2.503 billion (unchanged after adjusting for HPP). However, management now projects EBITDA of $250-$260 million, down from its prior forecast of $292-$307 million, and adjusted EPS of $1.11-$1.18, down from its prior forecast of $1.39-$1.50. * We are reducing our FY18 EPS estimate to $1.13 from $1.67 and reducing our FY19 estimate to $1.38 from $1.90. Our estimates assume higher expenses and also assume that the company’s accounting issues have been resolved. The involvement of Engaged Capital and speculation of a potential acquisition may boost the stock price; we will continue to monitor the impact in FY18, if any.
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