US Foods
USFD
$97.12
+1.11%
US Foods Holding Corp. is a leading U.S. foodservice distributor that sells and distributes more than 350,000 food and nonfood products to roughly 250,000 customer locations, spanning independent restaurants, chain restaurants, healthcare and hospitality clients, and education and government accounts, while also operating 98 cash-and-carry locations under the Chef'Store banner. With approximately $39 billion in fiscal 2025 sales and a 10% share of a highly fragmented industry, US Foods is a scale player whose 76 distribution facilities and 14 broadline production centers give it a structural cost and service advantage over smaller regional competitors, though it remains the clear number-two to Sysco. The current investor narrative centers on the durability of the company's multi-year margin-improvement program, which has driven gross margin from roughly 17.2% in early 2025 to 18.2% in the latest quarter, alongside steady mid-single-digit top-line growth and aggressive share repurchases that have reduced the diluted share count. Debate among investors focuses on whether these margin gains are sustainable as food inflation normalizes and restaurant traffic softens, and on the stock's sharp September pullback following a strong summer rally, which has reintroduced questions about valuation and near-term demand trends.…
USFD
US Foods
$97.12
Investment Opinion: Should I buy USFD Today?
The synthesized recommendation is a Buy, anchored by the analyst consensus rating of 'buy' (mean 1.53) and an average target price of $116.00, implying 19.7% upside from the current price of $96.92. The core thesis is that US Foods is executing a successful margin-improvement program, with gross margin expanding to 18.22% and operating margin to 4.21% in Q2 2026, driving earnings growth that is not fully reflected in the forward PE of 17.47x. The recent pullback offers an attractive entry point for a defensive, low-beta stock with strong cash flow generation.
Supporting evidence includes: 1) Revenue growth of 4.46% year-over-year in Q2 2026, with estimated fiscal 2026 revenue of $50.02 billion; 2) Gross margin improvement of 102 basis points year-over-year, leading to a 196-basis-point operating margin expansion; 3) Trailing free cash flow of $946 million, funding $370 million in buybacks in Q2 2026 alone; 4) Forward PE of 17.47x is in line with the sector and supported by a PEG ratio of 0.565, suggesting undervaluation relative to growth. The implied upside to the average analyst target is 19.7%, with a high target of $130.00 (34% upside).
The biggest risks that could invalidate the thesis are: 1) Margin compression if food inflation normalizes and restaurant traffic softens, as the company operates on thin margins; 2) Competitive pressure from Sysco and regional distributors; 3) High leverage with a debt-to-equity ratio of 1.33. The rating would upgrade to a Strong Buy if forward PE compresses below 15x or if gross margin exceeds 19%, and downgrade to Hold if revenue growth decelerates below 3% or if operating margin falls below 3.5%. Relative to its history and peers, the stock appears fairly valued on forward earnings but undervalued on a growth-adjusted basis, making it an attractive Buy for long-term investors.
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USFD 12-Month Price Forecast
The forward-looking view is bullish, supported by the company's demonstrated margin expansion, attractive forward valuation, and strong analyst sentiment. The key risk is the sustainability of margin gains, as the business operates on thin margins and is sensitive to food inflation and restaurant traffic. The recent pullback provides an attractive entry point, but the wide analyst target range ($65-$130) and building short interest indicate uncertainty. I would upgrade to high confidence if Q3 earnings show continued margin expansion and revenue growth above 4.5%, and downgrade to neutral if gross margin falls below 18% or if restaurant traffic deteriorates significantly.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on US Foods's 12-month outlook, with a consensus price target around $116.00 and implied upside of +19.4% versus the current price.
Average Target
$116.00
0 analysts
Implied Upside
+19.4%
vs. current price
Analyst Count
—
covering this stock
Price Range
$65 - $130
Analyst target range
The stock is covered by 15 analysts with a consensus recommendation of "buy" and a recommendation mean of 1.53 (where 1.0 is a strong buy and 5.0 is a sell), reflecting a clearly bullish tilt among the sell-side community. The average price target of $116.00 implies roughly 19.7% upside from the current price of $96.92, a substantial expected return that suggests analysts view the recent September pullback as an attractive entry point rather than the start of a sustained decline. The consensus leans bullish, supported by the estimated EPS average of $8.85 for the current fiscal year and estimated revenue of $50.02 billion, and the institutional ratings flow shows a cluster of Buy and Overweight ratings from BTIG, UBS, Wells Fargo, TD Cowen, Citigroup, and Guggenheim as of early August 2026, with JP Morgan and Piper Sandler maintaining Neutral stances. The target range spans from a low of $65.00 to a high of $130.00, a spread of $65 or roughly 56% of the current price, which signals meaningful dispersion in analyst views and high uncertainty about the company's trajectory. The high target of $130.00 implies approximately 34% upside and would require either multiple expansion toward the upper end of the sector range or faster-than-expected margin expansion and earnings delivery, while the low target of $65.00 implies roughly 33% downside and appears to price in margin compression, weakening restaurant demand, or a loss of share to competitors. The wide spread, combined with the recent pattern of Neutral reiterations from JP Morgan and Piper Sandler alongside Buy reiterations from the bulge-bracket banks, indicates that conviction is strongest among the banks with the most detailed distribution coverage, while the more cautious analysts are likely focused on the sustainability of the margin gains and the stock's recent underperformance relative to the market.
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Bulls vs Bears: USFD Investment Factors
The bull case currently has stronger evidence, driven by accelerating margin expansion, robust free cash flow, and a compelling forward valuation with significant analyst upside. However, the bear case highlights near-term risks from relative underperformance, thin margins, and high leverage. The most critical tension is whether the margin gains are sustainable as food inflation normalizes and restaurant traffic softens; if margins hold, the stock could re-rate toward analyst targets, but if they compress, the downside could be severe given the low-margin nature of the business. The recent September pullback and building short interest suggest the market is increasingly skeptical, making the next earnings report a pivotal catalyst.
Bullish
- Margin expansion accelerating: Gross margin rose to 18.22% in Q2 2026 from 17.20% in Q1 2026 and 17.55% in Q4 2025, while operating margin jumped to 4.21% from 2.25% in Q1 2026. This 102-basis-point gross margin improvement and 196-basis-point operating margin expansion demonstrate tangible operating leverage from private-label penetration and cost reduction.
- Attractive forward valuation: Forward PE of 17.47x represents a 32% compression from the trailing PE of 25.63x, implying expected earnings growth. The PEG ratio of 0.565 suggests the stock is undervalued relative to its growth rate, and the PS ratio of 0.44x is low for a company with stable cash flows.
- Strong analyst upside: The average analyst price target of $116.00 implies 19.7% upside from the current price of $96.92, with 15 analysts covering and a consensus recommendation of 'buy' (mean 1.53). The high target of $130.00 suggests 34% upside if margin expansion continues.
- Robust free cash flow and buybacks: Trailing free cash flow is $946 million, and the company repurchased $370 million of stock in Q2 2026 alone, funded entirely from internally generated cash. This reduces share count and boosts EPS, with diluted shares falling to 220.5 million from 233.6 million a year ago.
Bearish
- Recent relative underperformance: The stock is down 7.51% over the past month and 7.07% over three months, badly lagging the S&P 500's +0.59% and +3.34% gains, with relative strength readings of -8.10 and -10.41. This divergence signals distribution and loss of leadership, raising concerns about near-term demand.
- Thin margins vulnerable to inflation: Net margin is only 1.71% and operating margin 3.13%, meaning small cost increases can significantly impact earnings. The margin improvement to 18.22% gross margin may not be sustainable if food inflation normalizes and restaurant traffic softens, as the bull case relies on continued margin execution.
- High leverage and low coverage: Debt-to-equity ratio of 1.33 and a cash flow coverage ratio of 0.082 indicate moderate leverage, with interest coverage of 5.75x. While manageable, this limits financial flexibility and increases risk if earnings decline, especially with no dividend to attract income investors.
- Wide analyst dispersion: The target price range spans from $65.00 to $130.00, a 56% spread around the current price, signaling high uncertainty. The low target implies 33% downside, reflecting concerns about margin compression or weakening restaurant demand that could materialize.
USFD Technical Analysis
US Foods is in a broad recovery uptrend that has carried the shares 28.35% higher over the past year, with the current price of $96.92 sitting at roughly 65% of the 52-week range between a low of $69.875 and a high of $111.42. That positioning is neither euphoric nor washed out: the stock is well above its annual low but still about 13% below its 52-week high, suggesting a market that has rewarded the fundamental turnaround but has not yet priced in a full breakout to new highs. The 29.85% year-to-date gain confirms that the primary trend remains constructive, though the failure to reclaim the July-August highs leaves the stock in a consolidation phase rather than a clean momentum advance. Recent momentum has clearly decelerated and diverged from the longer-term trend, with the stock down 7.51% over the past month and 7.07% over three months, badly lagging the S&P 500's +0.59% and +3.34% respective gains and producing relative strength readings of -8.10 and -10.41 over those windows. The September slide from an August peak near $110.94 to a mid-September trough around $92.01 was sharp, and while the last two sessions have bounced strongly (+3.18% on the latest day to $96.92), the one-month decline against a rising market signals distribution and loss of leadership rather than a simple pause. The 5.41 short ratio indicates short sellers have been building positions, which could fuel a squeeze if the stock reclaims the $100 level, but it also reflects genuine skepticism about the durability of the recent run. Key resistance sits at the 52-week high of $111.42, and a decisive break above that level would confirm a resumption of the primary uptrend and likely trigger short covering; support rests at the 52-week low of $69.875, with intermediate support around the $92 area that has held twice in September. With a beta of 0.819, US Foods is roughly 18% less volatile than the broader market, meaning the recent 21.09% maximum drawdown was company-specific rather than a high-beta amplification of market moves, and position sizing should reflect that defensive volatility profile.
Beta
0.86
0.86x market volatility
Max Drawdown
-21.1%
Largest decline past year
52-Week Range
$70-$111
Price range past year
Annual Return
+27.8%
Cumulative gain past year
| Period | USFD Return | S&P 500 |
|---|---|---|
| 1m | -5.8% | +1.0% |
| 3m | -3.8% | +2.5% |
| 6m | +6.2% | +13.9% |
| 1y | +27.8% | +15.0% |
| ytd | +30.1% | +13.5% |
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USFD Fundamental Analysis
US Foods' revenue trajectory remains solidly positive, with the most recent quarter (ended June 27, 2026) delivering $10.532 billion in sales, up 4.46% year over year from $10.082 billion in the prior-year quarter. The multi-quarter trend shows sequential acceleration from $9.61 billion in Q1 2026 and $9.80 billion in Q4 2025, and the year-over-year growth rate has held in the mid-single digits across recent periods, consistent with a scale distributor growing modestly above foodservice industry volumes through share gains and inflation pass-through. Within the segment mix, the largest product categories — Product One at $3.767 billion and Product Two at $1.791 billion — dominate the revenue base, while the smaller categories such as Product Seven at $581 million and Product Six at $651 million contribute incrementally, and the breadth of the portfolio across independent restaurants, chains, and healthcare/hospitality end markets provides diversification that smooths cyclical demand. The growth trend supports the investment case of a steady compounder rather than a high-growth story, with analyst estimates pointing to roughly $50.0 billion in revenue for the current fiscal year. Profitability is thin but improving, as the company earned $275 million of net income on $10.532 billion of revenue in the latest quarter, a 2.61% net margin, while gross margin expanded to 18.22% from 17.20% in Q1 2026 and 17.55% in Q4 2025. Operating income of $443 million equated to a 4.21% operating margin, up from 2.25% in Q1 2026 and 3.41% in Q4 2025, reflecting both gross margin gains and SG&A leverage as the company executes its cost-reduction and private-label penetration initiatives. For a foodservice distributor, gross margins in the high teens and operating margins in the low single digits are typical, but the direction of travel — with EBITDA rising to $564 million in Q2 2026 from $336 million in Q1 2026 — demonstrates meaningful operating leverage that is the core of the bull thesis. The balance sheet carries moderate leverage with a debt-to-equity ratio of 1.33 and a current ratio of 1.16, while the company generated $946 million of trailing free cash flow and $431 million of operating cash flow in the latest quarter against only $76 million of capital expenditure, comfortably funding its growth investments. Return on equity of 15.70% and return on assets of 5.83% are respectable for a capital-intensive distribution business, and the company returned substantial capital to shareholders with $370 million of stock repurchased in Q2 2026 alone, funded entirely from internally generated cash rather than external financing. The cash flow coverage ratio of 0.082 and interest coverage of 5.75x indicate that debt service is well covered, and with no dividend payout, the company retains full flexibility to reinvest in the business or continue shrinking the share count.
Quarterly Revenue
$10.5B
2026-06
Revenue YoY Growth
+4.5%
YoY Comparison
Gross Margin
18.2%
Latest Quarter
Free Cash Flow
$946000000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is USFD Overvalued?
Because US Foods is solidly profitable with positive net income of $275 million in the latest quarter and trailing EPS of $0.039 on a reported basis (though the quarterly EPS run-rate is far higher at $1.26), the PE ratio is the appropriate primary metric, and the trailing PE of 25.63x compares to a forward PE of 17.47x — a 32% compression that implies the market expects earnings to grow substantially over the next twelve months. The gap between trailing and forward multiples is consistent with analyst estimates of $8.85 in average EPS for the current fiscal year, which would represent a dramatic step-up from the trailing figure, and the PEG ratio of 0.565 suggests the stock is inexpensive relative to its expected growth rate. The forward PE of 17.47x is the more meaningful anchor for a company with stable, low-cyclicality cash flows. Relative to the broader Consumer Defensive sector, where food distributors and staples companies typically trade in the mid-to-high teens on forward earnings, US Foods' forward PE of 17.47x sits roughly in line with or slightly below the sector average, while its PS ratio of 0.44x and EV/Sales of 0.64x are characteristic of a low-margin distribution business and not directly comparable to higher-margin packaged food peers. The EV/EBITDA of 13.82x is a more relevant cross-comparison for distributors and screens at a modest premium to the low-double-digit multiples often assigned to Sysco and other broadline peers, a premium that is arguably justified by US Foods' faster margin expansion and its 15.70% ROE. The PB ratio of 4.03x is elevated in absolute terms but reflects the asset-light working-capital nature of distribution and the substantial goodwill from the company's history, and the net margin of 1.71% and operating margin of 3.13% are structurally thin, meaning small margin gains translate into outsized earnings leverage. On a historical basis, the current trailing PE of 25.63x is above the stock's own recent range, which has seen quarterly PE readings of 19.51x in Q2 2026, 42.86x in Q1 2026, 23.00x in Q4 2025, and 28.16x in Q3 2025, placing the current multiple in the middle-to-upper portion of its one-year band. The PS ratio of 0.44x, however, is below the 1.72x-2.08x readings from the historical ratios table, though that discrepancy reflects the different share-count and market-cap basis used in the historical data versus the current market cap of $17.34 billion, and on a consistent basis the stock's price-to-sales has expanded from the ~1.25x level seen in 2023 to current levels as margins and earnings have improved. The takeaway is that US Foods is not cheap on trailing earnings but is reasonably valued on forward earnings and growth-adjusted metrics, with the market pricing in continued margin execution rather than multiple expansion.
PE
25.6x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 14x~43x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.8x
Enterprise Value Multiple
Investment Risk Disclosure
US Foods faces financial and operational risks primarily from its thin margins and moderate leverage. With a net margin of only 1.71% and operating margin of 3.13%, the company is highly sensitive to cost fluctuations; a 1% increase in cost of goods sold would wipe out a significant portion of net income. The debt-to-equity ratio of 1.33 and cash flow coverage ratio of 0.082 indicate that while debt is serviceable with 5.75x interest coverage, it limits flexibility, and the company has no dividend, relying on buybacks ($370 million in Q2 2026) to return capital. Revenue concentration in independent restaurants (33% of sales) and chain restaurants (23%) exposes it to restaurant traffic trends, and the sustainability of the recent gross margin expansion to 18.22% is uncertain if food inflation normalizes.
Market and competitive risks include valuation compression if the stock fails to meet growth expectations. The forward PE of 17.47x is slightly above the sector average, and the trailing PE of 25.63x is in the upper portion of its one-year range, leaving room for multiple contraction. Competition from Sysco and regional distributors could pressure pricing and margins, especially if restaurant demand weakens. The beta of 0.819 indicates lower volatility than the market, but the recent 21.09% maximum drawdown was company-specific, highlighting vulnerability to sector rotation. With no recent news, the market may be reacting to broader concerns about consumer spending and foodservice demand.
In a worst-case scenario, a combination of margin compression, weakening restaurant traffic, and loss of share to competitors could drive the stock toward its 52-week low of $69.875, representing a 28% decline from the current price of $96.92. The analyst low target of $65.00 implies a 33% downside, reflecting a scenario where gross margins revert to 17.2% and operating margins fall below 3%, leading to earnings misses and downgrades. If the stock breaks below the $92 support level, it could trigger further selling, with the next support at the 52-week low. Investors could lose up to 33% in this adverse scenario, underscoring the importance of margin sustainability.
FAQ
The key risks include: 1) Margin compression (financial) – net margin is only 1.71%, so a 1% cost increase could significantly impact earnings; 2) Competitive pressure (market) – Sysco and regional distributors could force price reductions, especially if restaurant traffic weakens; 3) High leverage (financial) – debt-to-equity of 1.33 and cash flow coverage of 0.082 limit flexibility; 4) Restaurant traffic sensitivity (company-specific) – independent restaurants account for 33% of sales, and a decline in traffic would hurt revenue. The most severe risk is margin compression, which could drive the stock to $65.
The 12-month forecast includes three scenarios: bull case (30% probability) with a target range of $116-$130, assuming sustained margin expansion and revenue growth above 5%; base case (50% probability) with a target range of $105-$116, assuming steady execution and EPS of $8.85; bear case (20% probability) with a target range of $65-$85, assuming margin compression and slowing restaurant traffic. The base case is most likely, hinging on the company meeting consensus estimates and maintaining gross margin above 18%. The average analyst target of $116 aligns with the base case.
USFD appears fairly valued on a trailing basis but undervalued on forward and growth-adjusted metrics. The trailing PE of 25.63x is above its recent historical range (19.51x in Q2 2026, 23.00x in Q4 2025), but the forward PE of 17.47x is in line with the sector and represents a 32% compression, implying expected earnings growth. The PEG ratio of 0.565 is below 1, typically indicating undervaluation. The PS ratio of 0.44x is low for a company with stable cash flows, though typical for low-margin distributors. The market is pricing in continued margin execution, not multiple expansion.
From a risk/reward perspective, USFD appears attractive for investors with a medium to long-term horizon. The stock trades at $96.92, with an average analyst target of $116 (19.7% upside) and a high target of $130 (34% upside). The forward PE of 17.47x is reasonable, and the PEG of 0.565 suggests undervaluation relative to growth. However, the biggest downside risk is margin compression, which could drive the stock to the analyst low target of $65 (33% downside). It is a good buy for those who believe in the sustainability of margin expansion and are comfortable with the thin-margin, competitive nature of foodservice distribution.
USFD is more suitable for long-term investment (minimum 1-2 years) given its low beta (0.819), steady growth, and margin-improvement story that requires time to fully materialize. The lack of dividend and high short interest (short ratio 5.41) introduces short-term volatility, making it less ideal for trading. The stock's 28.35% one-year return and 29.85% YTD gain show it can perform, but recent underperformance (-7.51% in one month) highlights near-term risks. Long-term investors can benefit from buybacks and earnings growth, while short-term traders might exploit volatility around earnings.
