A month has gone by since the last earnings report for United Natural Foods (UNFI). Shares have lost about 6.7% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is United Natural due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.
UNFI Q3 Earnings Miss Estimates, Sales Guidance Range Narrowed
United Natural Foods reported third-quarter fiscal 2026 results, wherein the top line declined year over year but the bottom line improved. However, both metrics missed the Zacks Consensus Estimate.
United Natural posted adjusted earnings of 77 cents per share for the fiscal third quarter, missing the Zacks Consensus Estimate of 81 cents. However, the adjusted earnings per share increased 75% year over year from 44 cents.
Net sales decreased 4.2% year over year to $7,723 million, missing the Zacks Consensus Estimate of $7,882 million. The decline included an approximate 450-basis-point impact from accretive optimization actions. Results were also affected by the initial unwind of previously referenced short-term project work for a single customer.
UNFI’s Quarterly Performance by Division
A key feature of the quarter was the divergence between Natural and Conventional trends. Natural segment sales increased 4.4% year over year to $4,342 million, reflecting continued demand for natural, organic, fresh and specialty products.
By contrast, Conventional sales declined 13.6% to $3,136 million, largely tied to the company’s accretive optimization actions and portfolio reshaping. Retail sales decreased 10.1% to $515 million, with management pointing to planned store closures as part of ongoing footprint optimization.
Analysis of UNFI’s Costs & Margins
UNFI’s gross profit fell 3% year over year to $1,049 million. The gross profit margin was 13.6%, which expanded 20 bps from 13.4% reported in the year-ago quarter. This expansion was driven by benefits from network optimization and a favorable customer mix, partially offset by a lower gross margin rate in the Retail segment.
Operating expenses declined to $954 million from $1,025 million in the prior-year quarter, and the operating expense as a percentage of sales improved to 12.4% of net sales from 12.7%. The company attributed the rate improvement to insurance proceeds and the benefits of cost-saving initiatives, including network optimization and higher distribution-center productivity.
Adjusted EBITDA increased 16.6% year over year to $183 million from $157 million. Adjusted EBITDA margin also expanded by approximately 40 basis points to 2.4% of net sales.
United Natural’s Financial Position
UNFI generated free cash flow of $54 million in the quarter. Net cash provided by operating activities totaled $98 million, while payments for capital expenditures were $44 million.
Balance-sheet progress remained a focal point. Net debt at the end of the quarter was $1.63 billion, and the net leverage ratio improved to 2.5x, which management characterized as the lowest level since fiscal 2018. Liquidity was approximately $1.25 billion, which consisted of $43 million in cash and about $1.20 billion of available capacity under the company’s asset-based lending facility. The company also repurchased 82,233 shares, with an average price of $48.64 for approximately $4 million.
UNFI Maintains FY26 Midpoints, Narrows Key Metrics Range
Looking ahead, UNFI reiterated fiscal 2026 outlook midpoints and narrowed ranges across several metrics. The company now expects net sales in the range of $31.1-$31.3 billion for fiscal 2026, down from the prior range of $31-$31.4 billion.
UNFI expects adjusted EBITDA to be in the range of $685-$705 million compared with the previous guidance of $680-$710 million and net income is now expected to be in the range of $55-$70 million compared with the previous guidance of $50-$75 million.
Adjusted earnings are expected to be in the range of $2.40-$2.60 per share compared with the previous guidance of $2.30-2.70. Capital expenditures are expected to be $250 million, and free cash flow is expected to be $330 million.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a upward trend in estimates review.
The consensus estimate has shifted 18.27% due to these changes.
VGM Scores
At this time, United Natural has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of A on the value side, putting it in the top quintile for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise United Natural has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
United Natural belongs to the Zacks Food - Miscellaneous industry. Another stock from the same industry, Mama's Creations, Inc. (MAMA), has gained 36.5% over the past month. More than a month has passed since the company reported results for the quarter ended April 2026.
Mama's Creations, Inc. reported revenues of $52.77 million in the last reported quarter, representing a year-over-year change of +49.7%. EPS of $0.05 for the same period compares with $0.03 a year ago.
For the current quarter, Mama's Creations, Inc. is expected to post earnings of $0.05 per share, indicating a change of +66.7% from the year-ago quarter. The Zacks Consensus Estimate has changed -16.7% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Mama's Creations, Inc.. Also, the stock has a VGM Score of D.
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United Natural Foods, Inc. (UNFI): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).