USFD Just Hit a Fresh Annual High, Now What?

What investors should know about USFD ahead of earnings

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US Foods Holding Corp (NYSE:USFD) is a foodservice distributor in the United States. The company markets and primarily distributes fresh, frozen, dry food and non-food products to foodservice customers throughout the country. USFD'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. US Foods also maintains approximately 72 primary operating facilities.

USFD has increased 111% over the past 12 months and is up roughly 165% from its May 14 annual low of $15.60. Additionally, shares of US Foods have grown 28% year-to-date, recently hitting a new 15-month high of $42.10 on April 30, with ongoing support from the 60-day moving average.

USFD Chart May 3

On April 19, US Foods announced that it will be hosting a conference call to discuss the results for the first quarter of 2021 on Monday, May 10.  US Foods has outperformed earnings expectations just once during its last four earnings reports. For the first quarter of 2020, USFD missed Wall Street estimates by a margin of $0.07, reporting an earnings per share (EPS) of $0.15. For the second quarter of 2020, US Foods' EPS decreased to -$0.25 but the company managed to beat expectations by a margin of $0.10. For the third quarter of 2020, USFD reported a swing back to profits, rising to $0.15 per share but missing estimates by a margin of $0.02. In the company's most recent quarterly report, US Foods posted an EPS of $0.05 and missed expectations by a margin of $0.05.

In 2020, the firm's revenues decreased 12% to nearly $22.9 billion, and net income fell by $639 million to $254 million in net losses. According to the balance sheet, USFD has $6.19 billion in total debt, while holding just $828 million in cash.

Overall, US Foods stock is undoubtedly overvalued at its current stock price. USFD is trading near annual highs despite the company struggling heavily with earnings, revenue consistency, and a shoddy balance sheet. US Foods has also been experiencing a constant decline in net income over the past few years, losing roughly $298 million in total since fiscal 2017. As a result, USFD could be a good candidate for the short sellers at this time.

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