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US Foods Holding Corp USFD

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5-Star Price

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Economic Moat

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Capital Allocation

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No-Moat US Foods Is Managing Pandemic Challenges Well, Leaving Shares Modestly Undervalued

Analyst Note

| Rebecca Scheuneman, CFA |

No-moat US Foods reported second-quarter sales of $7.7 billion, a mid-90% of prepandemic sales (adjusted for acquisitions) by our estimate, besting our expectation for sales that represented a high-80% of the pre-crisis level. By channel, restaurants, healthcare facilities, and hospitality sales were at 105%, 90%, and 60% of 2019 sales, with the latter exiting the quarter at over 70%. Although a recent uptick in the number of COVID-19 cases may slow the pace of the recovery, we now think US Foods’ sales will return to its previous peak by early 2022, from late 2022 previously.

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Company Profile

Business Description

US Foods is the second- largest U.S. food-service distributor behind Sysco, holding 10% market share of the highly fragmented food-service distribution industry. US Foods distributes more than 400,000 food and nonfood products to the healthcare and hospitality industries (each about 16.5% of sales), independent restaurants (33%), national restaurant chains (22%), education and government facilities (8%), and grocers (4%). In addition to its delivery business, the firm has 80 cash and carry stores under the Chef'Store banner. After Sysco's attempt to purchase US Foods failed to gain federal approval in 2015, US Foods entered the public market via an initial public offering.

Contact
9399 West Higgins Road, Suite 100
Rosemont, IL, 60018
T +1 847 720-8000
Sector Consumer Defensive
Industry Food Distribution
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Slow Growth
Employees 26,000

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