UNFI Drops Ahead of Third-Quarter Report

UNFI has a history of negative moves after reporting earnings

Assistant Editor
Jun 9, 2020 at 12:23 PM
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The shares United Natural Foods Inc (NYSE:UNFI) are down 5.1%, to trade at $21.45 this afternoon, just ahead of the food retailer's fiscal third-quarter earnings report, which is due out before Wednesday's open. Below, we'll dig into how UNFI has fared in the past, and see what post-earnings moves the options market is pricing in for the shares. 

Despite today's plummet, UNFI is still up 145.8% for the year, and is testing annual-high territory after rising more than 350% from its mid-March all-time low. Guiding United Natural Foods' stock north is the rising 20-day moving average, a trendline that has been a consistent level of support for much of the last three months. 

UNFI Chart June 9

In the options pits, United Natural Food stock's 50-day call/put volume ratio of 8.34 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the elevated 86th percentile of its annual range. In other words, this suggests a very healthy appetite for long calls of late. 

Echoing this, UNFI's Schaeffer's put/call open interest ratio (SOIR) of 0.41 sits in the low 15th percentile of other readings from the past year. This suggests short-term option players have rarely been more call-biased in the past 12 months.

History shows that United Natural Foods stock has closed lower the day after reporting in all of the past eight quarters. Over the past two years the stock has averaged a swing of 14.2%. This time around, the options pits are pricing in a staggering 22.5% shift, meaning all eyes will be on UNFI tomorrow morning.

Lastly, analysts look to be approaching the equity with caution. All seven brokerages sport a tepid "hold," and the security’s consensus 12-month price target of $15.50 is a whopping 31.5% discount to current levels. This means UNFI could be due for some price-target hikes and/or upgrades in the near future.

 

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