What Happened?
Shares of food distribution giant US Foods (NYSE:USFD) jumped 6.8% in the afternoon session after Shares of US Foods climbed after the company reported strong second-quarter financial results that surpassed analyst expectations for both revenue and earnings.
The food distribution giant announced quarterly revenue of $10.53 billion, a 4.5% increase from the same period a year ago, beating consensus estimates. Adjusted earnings came in at $1.44 per share, which was also ahead of expectations.
The positive performance was supported by a 1.9% increase in total sales volumes year on year. US Foods also delivered adjusted EBITDA of $604 million, outperforming Wall Street's forecasts, while its operating margin remained stable at 4.2%.
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What Is The Market Telling Us
US Foods’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 9.3% on the news that the company reported fourth-quarter results where its profit beat analyst expectations, overshadowing a slight miss on revenue. The foodservice distributor posted adjusted earnings of $1.04 per share, surpassing Wall Street's estimate of $1.01.
This profit beat appeared to outweigh the fact that its revenue of $9.8 billion came in just shy of the $9.9 billion consensus. While sales volumes were flat compared to the previous year, the company's ability to significantly grow earnings per share from $0.84 in the same quarter last year demonstrated strong profitability. Looking ahead, analysts expect the company's earnings per share to continue growing by 18.6% over the next twelve months, which likely fueled investor confidence in the stock.
US Foods is up 43.8% since the beginning of the year, and at $107.34 per share, it has set a new 52-week high. Investors who bought $1,000 worth of US Foods’s shares 5 years ago would now be looking at an investment worth $3,147.
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