r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.

UNFI DD – Why a nutrition provider will provide you with tendis. : wallstreetbets

This isn’t meant to work as a diversification to make individuals not put money into $GME or soar ship. In the event you wan’t to purchase gamestop or maintain gamestop it is best to.

Be at liberty to chime in and proper me or give suggestions. Since that is going to be a protracted learn and the gathering of information took endlessly i’ll copy paste some issues.

Compulsory: I’m not an expert investor and this isn’t investing recommendation. Each commerce you make, you make at your personal threat. That is simply me, an everyday dude telling you a few inventory I discovered and why I imagine in it.

So, what’s $UNFI and what do they do?

UNFI is North America’s largest publicly traded wholesale distributor. UNFI engages within the distribution of herbal, natural, and specialty ingredients and non-food merchandise. The agency operates by way of the next segments: Wholesale and Retail. The Wholesale section is engaged within the nationwide distribution of herbal, natural, specialty, produce, and traditional grocery and non-food merchandise, and offering retail companies in america and Canada. The Retail section derives revenues from the sale of groceries and different merchandise at retail areas operated by corporations. It gives nutrition and non nutrition, frozen, perishables, bulk, physique care merchandise and dietary supplements. The corporate is the main distributor and retailer companies with 55 nutrition distribution facilities all situated inside 85% of the US/Canadian inhabitants. UNFI’s shut proximity to its clients drives vital price benefits, as product transportation bills (the most expensive side of the nutrition supply enterprise) are minimized, serving to streamline operations and drive backside line income progress. This supplies UNFI with a aggressive pricing benefit, as the corporate is ready to ship wholesale nutrition objects extra rapidly and at a greater value than rivals.

With annual revenues exceeding $27 billion, UNFI is likely one of the largest North American and Canadian nutrition wholesalers distributing greater than 275,000 merchandise to over 30,000 buyer areas distributed throughout two continents. It shows distinct enterprise benefits, together with large scale, operational effectivity, and substantial income diversification. UNFI’s revenues are really proof against erosion or disruption. The corporate derives revenues from an unlimited array of consumers throughout each wholesale and retail working segments, serving to to mitigate detrimental results related to shedding any single buyer. UNFI has been the first distributor to Entire Meals Markets for greater than 20 years and has developed entrenched competition-resistant relationships with fairly various well known nutrition retailers starting from Entire Meals (AMZN), Kroger (KR), Sprouts (SFM), Wegmans, Harris Teeter, Money and Carry Shops, The Contemporary Market, Coborn’s, Pure Grocers, and Jerry’s Meals, amongst others. UNFI solely has one major competitor, SpartanNash Different preeminent nutrition distribution corporations Sysco (SYY) and US Meals (USFD) service a distinct demographic concentrating on eating places, colleges, companies, hospitals, and so on., whereas UNFI focuses on supermarkets and nutrition retailers in each the wholesale and retail working segments.


So am I actually pushing a grocery inventory when there are sexier funding alternatives like PLTR? That’s proper, I’m. And it positive is an unsexy boomer inventory, but it surely’s additionally a huuuuuge worth funding proper now and with the market being as saturated as it’s when loads of corporations appear to have world domination priced in it positive feels good parking my cash in a inventory that’s each undervalued and defensive towards a market crash or inflation. All of us gotta eat proper?


Amidst lockdowns and a nationwide pandemic, UNFI demonstrated powerful efficiency in 2020. It reported gross sales progress throughout all channels; chains gross sales elevated 21% to $10.7 billion, unbiased retailers’ gross sales elevated 21% to $6.7 billion, supernatural gross sales elevated 7.4% to $4.7 billion, and retail gross sales elevated 41.0% to $1.7 million. The corporate has witnessed constant income growth for greater than 20 years, experiencing excessive mid-single digit progress for a few years. Its underlying nutrition enterprise is very recession-resistant with secure income prospects over the long run. Cash historically spent in eating places, at colleges, close to workplaces, at bars, and so on. is being redirected towards grocery spending. Some estimates point out that the restaurant business has misplaced upwards of $200 billion on account of the pandemic. Though devastating to restaurant companies, the cash misplaced can be redirected towards the retail grocery section.

Some boring monetary oversight

Based on its newest quarterly earnings launch, UNFI expects to scale back internet debt to $2.44 billion by the top of FY 07/2021, excluding any proceeds from potential divestitures. Over the last earnings name, administration stated they anticipate to realize internet debt to adjusted EBITDA leverage of roughly 3.5 occasions by July 2021. Compared, the leverage ratio was 5.5x on the finish of October 2019. An examination of UNFI’s financials reveals very powerful efficiency on the corporate’s earnings assertion, regular income growth, internet gross sales up practically 20% from final yr alone, and that revenues have elevated for 20 years. What might occur after the corporate has managed to realize a internet debt/EBITDA ratio of two.0 to 2.5? Firstly, the board might distribute dividends or launch a share buyback program.

Going ahead, UNFI as a pure-play distributor ought to be capable to throw off free money of $300 million on a yearly foundation. Taking into consideration administration’s self-declared ongoing deal with decreasing prices, increasing margins and growing free money flows, in addition to decrease curiosity funds ensuing from debt reductions, the variety of $300 million might finally evolve into $350 million over the long run if every thing goes nicely.

With a market capitalization of $895 million, future free money flows of $330 million a yr as estimated by analysts, administration’s expectation of internet debt falling to $2.4 billion by the top of FY 07/2021 and a brief curiosity of 23 %, the S&P SmallCap 600 member could also be a wonderful worth play.

• Web Gross sales elevated 6.0% to $6.67 billion

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• Web lack of $1 million, together with $43 million in pre-tax costs and prices

• Adjusted EBITDA elevated 30.6% to $159 million

• Loss per diluted share of $0.02, reflective of costs and prices

• Adjusted earnings per share (EPS) elevated by $0.47 to $0.51

• Prior steerage affirmed for internet gross sales, adjusted EBITDA, and adjusted EPS

Latest offers:

As of March 04 UNFI have prolonged it’s deal on being Entire Meals provider till 2027. Amazon’s on-line grocery gross sales are growing at a speedy price with a CAGR of 9%, with 2021 grocery gross sales anticipated to succeed in $23 billion. UNFI will profit from enduring tailwinds originating from the Amazon and Entire Meals working segments lengthy into the long run. This deal serves as an enormous catalyst and has lengthy been a giant “beware signal” for traders, now when the deal is inked we’ll in all probability see extra traders coming in when the massive will they will not they query have been answered. The inventory noticed an increase of 6% on thursday when the deal was introduced and a quantity of about 3.3, about 2x common which appears… low contemplating how giant of a deal it’s.

r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.

The OMG is Entire ingredients leaving UNFI scare 2018:

Strategically it would not make monetary sense for Amazon to speculate tens of billions of {dollars} to arrange one other 40+ distribution services particularly for nutrition objects and purchase fleets of supply autos, all so as to generate a low-single digit return on funding. Nevertheless it was a giant concern for traders. Whereas many shareholders have been criticizing administration for paying $2.9 billion to take management of competitor Supervalu again in 2018. Strategically, the acquisition was a really good transfer. The deal was merely essential to minimize UNFI’s reliance on buyer Entire Meals Market. Earlier than the acquisition, Entire Meals Market accounted for 37 % of UNFI’s revenues. Now the client’s share of gross sales is all the way down to 18 %. In reality, over the last quarterly earnings name we discovered that UNFI exceeded its four-year goal of $185 million in synergies in simply two years. On prime of that, free money pass reached a file of $284 million in FY 07/2020. It simply appears that administration has extra potentialities to optimize the economics and fundamentals of the enterprise, due to the acquisition of Supervalu.

Key Meals:

UNFI lately signed a cope with Key Meals and now serves as the first grocery wholesaler to Key Meals with anticipated gross sales to UNFI of roughly $10 billion over 10 years. Key Meals, whose members function greater than 315 shops, is a quickly rising group with a big market share within the New York market

Some powerful financials to take discover of:

  • The inventory carries a really low ahead P/FCF ratio of simply 2.7, offering ample upside potential.

  • Based on SharePad there are at the moment 1192 publicly traded corporations on a US inventory alternate that generates revenues of $1.5B and have a market capitalization of at the very least $100m. Banks, insurers, and actual property corporations are excluded from this tradition display. FCF estimates should not out there for 145 on that listing. Apparently, out of the 1,047 shares, solely 23 carry a ahead P/FCF a number of of between 0 and three. United Pure Meals is one among them.

  • until UNFI wants an enormous capital improve or goes bankrupt, it is arduous to think about the inventory will proceed to hover at unusually low valuation ranges.

  • Return vs Business: UNFI exceeded the US Shopper Retailing business which returned 9.1% over the previous yr.

  • Return vs Market: UNFI exceeded the US Market which returned 36.3% over the previous yr.

  • PB vs Business: UNFI is nice worth primarily based on its PB Ratio (1.3x) in comparison with the US Shopper Retailing business common (2.8x).

  • Beneath the hood there’s retail that ought to promote for ~$700m and one other ~$2B of actual property,

  • United Pure Meals continues to learn from the pandemic, offering extra money flows within the close to time period which permits for a modest discount in debt.

  • present PE ratio of about 13 and anticipated to go even decrease as they maintain reporting pandemic earnings.

  • Utilizing these earnings to repay debt means forward of schedule and strengthening their monetary place additional.

  • Advantages from a low intrest price from the federal reserve with reference to their debt

  • Advantages from COVID-19

First Quarter Fiscal 2021 Highlights (comparisons to first quarter fiscal 2020):

Web Gross sales elevated 6.0% to $6.67 billion

Web lack of $1 million, together with $43 million in pre-tax costs and prices

Adjusted EBITDA elevated 30.6% to $159 million

Loss per diluted share of $0.02, reflective of costs and prices

Adjusted earnings per share (EPS) elevated by $0.47 to $0.51

Prior steerage affirmed for internet gross sales, adjusted EBITDA, and adjusted EPS

r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.


There may be all the time some inherent threat concerned in each commerce and I really feel like solely presenting the bull case may be very deceptive. The largest bear argument for UNFI is their debt for positive, so let’s undergo it.

UNFI does exhibit some vulnerabilities in its stability sheet – the corporate has a debt load of $2.6 billion and a reasonable debt-to-equity ratio of two:1, and debt is roofed by working money pass at roughly 20% protection; nonetheless, UNFI does lack substantial liquidity reserves, displaying simply $49 million in out there liquidity.

r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.
r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.
r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.

Though: (NOTE: This section is from a calculation made in jaunary and it is solely objective is to present you an impression of the legroom UNFI has, I am a lazy fuck so i will not replace this to replicate todays values) From a valuation standpoint, UNFI is undervalued by any means of research: P/E, PEG, PB, or discounted money pass; the inventory is buying and selling at a P/E ratio of 6.7x earnings and is drastically undervalued. Based mostly on a reduced money pass evaluation, the present share value of $15.58 is means beneath the long run money pass worth of $86.01, implying that the inventory is undervalued by 82%.

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United Pure Meals continues to learn from the pandemic, offering extra money flows within the close to time period which permits for a modest discount in debt On the finish of 2019, UNFI’s long-term debt stood at $3.05 billion whereas internet earnings was detrimental by a really slim margin relative to their huge income. By the top of 2020, the long-term debt had been diminished to $2.6 billion- a discount of 17.3% throughout solely 4 quarters. Rapidly paying down this debt has been drastically decreasing curiosity funds on it, and mixed with macro-level tailwinds, this has seen Y/Y internet earnings greater than triple, from $101 million in 2019 to $306 million in 2020. In early 2021, UNFI introduced that the curiosity on their senior debt shifting ahead had been diminished from 4.25% to three.5%. This debt has additionally allowed UNFI to extend whole income from $8.47 billion in 2016 to $26 billion in 2020, whereas on the identical time bettering each gross and internet margin. UNFI’s stability sheet, you can perceive how this firm could possibly be undervalued, however by digging a bit of deeper, you possibly can see that this debt just isn’t lifeless weight, however has been put to work successfully. Debt has been an issue for UNFI ever for the reason that Supervalu acquisition. Nonetheless, UNFI is starting to show a nook as the corporate is producing more healthy income and margins amid the pandemic, which permits them to speed up debt funds. UNFI additionally has a considerable quantity of actual property (between $1B to $2B) that it might promote inside the subsequent few years and repay much more debt. Just lately UNFI repriced senior secured time period loan facility, which diminished its rate of interest by 50 to 75 foundation factors on $1.8B due in 2026. Which saves the corporate 9-13 mil and reveals the debt profile is bettering with lenders.

r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.

A bear case for UNFI’s debt scenario is that when this pandemic is over persons are going to go to eating places quite a bit which is able to lower their income. UNFI just isn’t a participant in provides to eating places.


At present hiring workers by way of this pandemic whereas different companies lay individuals off and chasing expertise to the board with current hires corresponding to:

Gloria Boyland to its Board of Administrators

Ms. Boyland at the moment serves as a strategic advisor of Aurora Applied sciences, LLC, a place she has held since June 2020. Previous to that, Ms. Boyland served as Workers Vice President (starting in 2004) and Company Vice President (starting in 2015) at FedEx Company the place she was liable for analysis and management of superior operations know-how initiatives, service high quality and buyer expertise enhancements, and new service choices for the corporate. Previous to her tenure at FedEx, Ms. Boyland held management positions in varied features at GE Capital Company, together with Six Sigma High quality, mergers and acquisitions and acquisition integration. She additionally practiced for eight years as a industrial transactions and funding lawyer at GE. Ms. Boyland at the moment serves on the boards of administrators of Chesapeake Vitality Company and Vontier Company and beforehand served as a member of the board of UMRF Ventures, Inc. In 2016, Ms. Boyland was appointed to the U.S. DOT Advisory Committee on Automation in Transportation.

Dorn Wenninger Senior Vice President of Produce

Wenninger brings to UNFI greater than 25 years of expertise within the procurement, gross sales, advertising, and operations of a number of outstanding packaged ingredients and retail corporations. He most lately served as Vice President Perishables for Walmart Mexico the place he was liable for sourcing, shopping for, and product growth of the recent departments for two,400 shops within the area in addition to Walmart’s owned meat processing crops. Previous to this position, Wenninger served because the Vice President of Produce and Floral and Vice President of International Meals Sourcing for Walmart USA

Jim Gehr Chief Provide Chain Officer

Jim is a highly-regarded provide chain govt who brings operational excellence expertise to UNFI together with a confirmed monitor file of constructing and motivating groups,” stated Dorne. “He has a historical past of making and rising enterprise alternatives, establishing sustainable processes, and creating a powerful tradition of steady enchancment that drives worth all through the availability chain and, finally, to clients. His distinctive experiences – from integrating rising applied sciences to successfully using information analytics – will improve UNFI’s long-term working mannequin and assist speed up our innovation. Jim is a fascinating chief and we’re excited to welcome him to UNFI.”

Jack Clare Chief Data Officer

Clare brings to UNFI greater than 20 years of expertise in IT and strategic management roles for outstanding customer packaged items and restaurant retailers. He most lately served as Chief Data and Technique Officer at Dunkin’ Manufacturers, the place he was liable for directing all data know-how assets with an intense deal with supporting franchisees and driving restaurant profitability by way of know-how. Previous to becoming a member of Dunkin’ Manufacturers, Clare served as Vice President, IT and Chief Data Officer for Yum! Eating places Worldwide, and spent seven years with Constellation Manufacturers, most lately as its Vice President, Technical Companies.

Quick Curiosity:

r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.

Now that is in all probability the place loads of you guys lose curiosity and loads of you guys acquire curiosity. UNFI has a major of it’s shares shorted about 12,4 mil out of it’s excellent 56,14 mil. It’s under no circumstances even near $GME’s quantity of shorted shares, but it surely’s quite a bit nonetheless. Much more so when you think about that the general public float is round 5-6mil and day by day quantity about 1,6m. Now there is no such thing as a scarcity of shares to borrow in accordance with iborrowdesk and the price is low.

r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.

If shorts have been to be trapped nonetheless it will take them about 7 days to shut their place primarily based on day by day quantity. There in all probability received’t be a brief squeeze, however there’s a likelihood. What makes a excessive brief curiosity engaging is that when they’re flawed it creates loads of upwards momentum and boy are they flawed about this one lol. Quick sellers are at vital threat of blowing-up with ~22% of the float brief and with the full {dollars} brief up a unprecedented 444% since February of 2020. To place this into perspective, the full {dollars} brief (a determine that Ihors Dusaniwsky of S3 usually cites as crucial in figuring out the danger to brief sellers) was $332M in comparison with $61M in February of 2020. Principally they’re bleeding. They will simply brief the inventory extra to suppress the worth however the writing have been on the wall for a while and whereas it would simply be a gradual rush they’re solely delaying the inevitable.

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The largest threat to UNFI was beforehand a failure to increase the Entire Meals contract. However because it isn’t anymore and earnings can be boom-diggitey shorts are in all probability weighing their choices now.

Who’s shorting this inventory?

Looks like a silly inventory to brief at this point in time. The shorts are resulting from a dispute between UNFI and Goldman Sachs and appears petty to me, UNFI misplaced on a technicality. Right here’s an outdated headline.

“United Pure Meals, Inc. Information Lawsuit Towards Goldman Sachs and Associated Events. Lawsuit Particulars How Goldman Sachs Systematically Deceived, Exploited and Threatened UNFI Whereas Advising the Firm on its Acquisition of SUPERVALU”


As a result of each dynamite wants a fuse:

  • New CEO Substitute – final yr confirmed that present CEO can be retiring in July 2021 and a brand new CEO can be introduced early 2021

  • March 10 earnings

  • Share buyback (really unlikely within the close to time period)

  • the sale of the retail grocery enterprise (Cubs and Buyers) in addition to the sale of different property that have been acquired by way of the Supervalu acquisition.

  • Hook one other huge buyer/Being purchased up by Amazon or purchase the enterprise of amazon recent (that is really speculative and mainly an x issue)

  • New contract with Entire Meals. (Which simply happend, Heres a quote from domo capital: “DOMO Capital believes that shares of UNFI can be valued at over $100 per share inside the subsequent 3 years. We imagine that the majority of those features can be realized upon the finalization of the Entire Meals contract extension and the sale of the retail operations and different property”

Quick time period bull indicators

r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.

Curious rise in choices exercise on wednesday march 3. Quantity spike as much as 5506 march 19 contracts. 550,600 underlying shares, 66% of unfis shifting common. Particularly excessive quantity for march 19 35$ strike. That is the present choice chain. Looks like some calls have been exercised.

r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.

Latest uptick in quantity. Quantity have been low between feb 4 – march 3. Quantity spike after Entire Meals information. (does not appear to be priced in, solely up 6% on the information.) UNFI closed up 5.35 % on Friday, March 5, 2021, on 1.3 occasions regular quantity.

r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.

Some cool ass coloured strains to have a look at

r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.

And one other one

r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.

^High (day by day): UNFI makes huge features in a really brief period of time with 2 +100% features in beneath per week for the reason that March 2020 low

Backside (weekly): not solely does UNFI go on explosive runs, however the subsequent run might take the inventory above a 6 yr lengthy downtrend. With the inventory working into the apex of a descending triangle , I’ve to suppose a giant transfer is coming quickly.

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The inventory lies within the decrease a part of a really broad and powerful rising pattern within the brief time period, and this will usually pose an excellent shopping for alternative. If the decrease pattern flooring at $29.91 is damaged, it can firstly point out a slower price of rising, however might also be an early warning for a pattern shift. Given the present short-term pattern, the inventory is anticipated to rise 73.11% throughout the subsequent 3 months and, with a 90% likelihood maintain a value between $51.77 and $66.92 on the finish of this 3-month interval.

That’s just about it. However some issues to think about:

Inventory value would possibly drop after earnings as they usually do resulting from shorting or unload.

r/wallstreetbets - UNFI DD - Why a food supplier will supply you with tendis.

Been debating myself if i ought to get out and get again in after earnings, however as off now i feel i’m simply going to let my shares trip.

Place: 3200 shares at 30.50.

Sources/Extra data on UNFI:























Particular shout out to the opposite redditors who’ve been writing some GOOD ASS DD’s

/u/gpech /u/BE_power7x7 /u/why_worry_oh_wait /u/seancole2 /u/reddit_eats_tidepods /u/blakes5353

/u/toitschland /u/mr_marcus_91

Tldr; UNFI is a singular low threat excessive reward play that’s posed to do nicely each within the brief and the long run. UNFI is a big worth play that provides good defensive qualities in addition to the potential of a giant brief time period motion.

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