United Natural Foods posts higher EPS but misses revenue targets

United Natural Foods (NYSE:UNFI) delivered earnings per share of $0.69 for the recent quarter, surpassing the consensus estimate of $0.62 by $0.07. This performance marked a recovery from the same period last year, when the company reported a loss of $0.11 per share. According to data from GN stocks/earnings-beat, the firm maintained a net margin of 0.27% and a return on equity of 10.51% during this period.

Despite the profit beat, revenue came in below expectations. The company generated $7.64 billion in sales, missing the analyst forecast of $7.71 billion. Quarterly revenue declined by 0.7% compared to the prior year. Conventional product sales dropped in the mid-single digits, while retail sales fell by 8%, indicating continued pressure on the top line despite improved bottom-line results.

Financial metrics show improved leverage

Fiscal 2026 Adjusted EBITDA rose 27% year-over-year to $701 million, driven by margin gains and cost savings. The company reported record free cash flow of $323 million. Net leverage decreased significantly to 2.2x from 3.3x, a result supported by lower debt levels and refinancing savings. Management aims to reduce leverage further to below 2.0x by the end of fiscal 2027.

Guidance targets EBITDA growth and sales increase

For fiscal 2027, United Natural Foods projects Adjusted EBITDA between $730 million and $780 million, representing high-single-digit growth at the midpoint. Adjusted EPS is guided to range from $3.00 to $3.50. The company expects sales to rise approximately 1% at the midpoint to between $31.2 billion and $31.8 billion. Management noted that this trajectory positions the firm to reach its fiscal 2028 margin target one year early.

Revenue growth is expected to be uneven across the fiscal year. Sales are likely to decline in the first quarter as the company laps previous optimization actions and project work. Profitable growth is anticipated to return in the second half of the year. Capital spending for fiscal 2027 is expected to increase to about $300 million, which may offset some EBITDA growth in free cash flow.

Capital allocation includes new buyback program

The board authorized a new $200 million share-repurchase program following the repurchase of approximately $50 million of stock in fiscal 2026. Higher fuel costs and low-single-digit inflation are expected to pressure results, but the company continues to prioritize balance sheet strength. The combination of debt reduction and share repurchases reflects a strategy focused on financial flexibility and shareholder returns.