United Natural Foods Stock Chart Bearish Before Earnings

It would take shorts over two weeks to cover their bearish bets

Managing Editor
Sep 19, 2018 at 12:58 PM
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Shares of United Natural Foods Inc (NASDAQ:UNFI) are 2% lower at $33.34 in afternoon trading, as investors gear up for the company's fiscal fourth-quarter earnings report. The food distributor's results are slated to surface after the market closes tomorrow, Sept. 20. Below we will take a look at how UNFI has been faring on the charts, as well as what the options market is pricing in for the stock's post-earnings move.

United Natural Foods stock has been in a downward spiral of late, suffering two sizable bear gaps this calendar year. Plus, the formerly supportive 40-day moving average has switched to a ceiling of resistance. UNFI is down 32% year-to-date, and just last month touched a fresh annual low of $31.84.

Daily Chart of UNFI with 40MA

Digging into its earnings history, UNFI has closed lower the day after reporting in five of the past eight quarters, including an unusual 14.3% drop in early June. Overall the shares have averaged a 4.7% move the day after earnings over the last two years, regardless of direction. This time around, however, the options market is pricing in a much larger-than usual 11.7% move for Friday's trading.

Looking toward analyst sentiment, those covering the stock have been unsurprisingly pessimistic. For example, of 16 firms, 12 carry "hold" or worse ratings. The underperformer may also be in store for a round of price-target cuts, as its average 12-month price target stands at a 34% premium to current trading levels at $44.93.

Lastly, short interest on UNFI fell slightly during its most recent reporting period, and now accounts for more than 10.6% of the stock's total available float. At the food distributor's average daily trading volume, it would take shorts more than two weeks to buy back their bearish bets.

 

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