Confused investor, strange stock behavior

US Foods is expected to post profits ahead of its May 10th opening

US Foods Holding Corp (NYSE: USFD) is a food service retailer in the USA. The company mainly markets and sells fresh, frozen, dry food and non-food products to food service customers across the country. USFD customers include independent single and multi-family homes, 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 has approximately 72 primary operating facilities.

USFD is up 111% over the past 12 months, up around 165% from its May 14 low of $ 15.60 for the year. Additionally, US Foods stocks are up 28% year-to-date and recently hit a new 15-month high of $ 42.10 on April 30th, with continued support for the 60-day moving average.

USFD Chart May 3rd

On April 19, US Foods announced that it would hold a conference call to discuss results for the first quarter of 2021 on Monday, May 10. US Foods has exceeded earnings expectations only once in the last four earnings reports. For the first quarter of 2020, USFD missed Wall Street’s estimates by a margin of $ 0.07 and reported earnings per share (EPS) of $ 0.15. For the second quarter of 2020, US Foods earnings per share decreased to $ 0.25, but the company beat expectations with a margin of $ 0.10. For the third quarter of 2020, USFD reported a drop in earnings that rose to $ 0.15 per share, but lacked estimates of a margin of $ 0.02. In the company’s most recent quarterly report, US Foods posted earnings per share of $ 0.05 and fell short of expectations with a margin of $ 0.05.

In 2020, the company’s revenue declined 12% to nearly $ 22.9 billion, and net income declined $ 639 million to $ 254 million in net losses. According to the balance sheet, USFD has total debt of $ 6.19 billion and only $ 828 million in cash.

Overall, US Foods stock is undoubtedly overvalued at current share price. USFD is trading near year highs despite the company struggling hard with earnings, sales consistency and a poor balance sheet. US Foods has also seen a steady decline in net income over the past few years, losing a total of around $ 298 million since fiscal 2017. As a result, USFD could be a good candidate for the short seller at this point.

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