United Natural Foods, Inc. (UNFI): A Bull Case Theory

We came across a bullish thesis on United Natural Foods, Inc. on Value Don’t Lie’s Substack. In this article, we will summarize the bulls’ thesis on UNFI. United Natural Foods, Inc.'s share was trading at $27.66 as of July 29^th. UNFI’s trailing and forward P/E were 9.45 and 19.88, respectively according to Yahoo Finance.

United Natural Foods Inc. (UNFI) represents a middle-innings turnaround and deleveraging story, trading at just 6.6x FY25E EBITDA despite showing encouraging early results from a three-year recovery plan. The company operates two segments: wholesale distribution—its core business with 250,000 SKUs across 11,000 suppliers serving 30,000 locations, primarily grocery chains—and a legacy retail segment of 75 grocery stores from the 2018 SuperValu acquisition, which contributes no meaningful EBITDA.

UNFI had strong pre-2018 growth, but the SuperValu deal saddled it with leverage and underperforming assets, pushing shares from $50 to $10. After a post-pandemic rebound, FY24 saw a renewed earnings collapse, but management responded in October 2024 with a three-year plan focused on flat revenue, high-single-digit EBITDA growth, higher free cash flow, and lower leverage. Execution is ahead of schedule: FY25 revenue is pacing at $31.7bn (above flat projections, even after a $350–400m cyberattack impact), EBITDA guidance is $550m–615m, and FCF has doubled to $200m.

Net leverage is expected to fall to 2.5x by FY26—one year ahead of plan. If UNFI delivers on FY27 targets of $650m EBITDA and 0.5% FCF margin, the business could generate $150m in FCF and trade closer to 7x EBITDA, implying a stock price of $48—offering a 30% IRR from current levels. The market’s hesitation likely stems from current debt at $1.9bn and the recent cyberattack, but operational impacts appear contained, and investor confidence is returning. Ultimately, this looks like a straightforward execution story where simply hitting already conservative targets could yield strong equity upside.

Previously, we covered a bullish thesis on Fresh Del Monte Produce Inc. (FDP) by Charly AI in March 2025, which highlighted its operational turnaround and focus on high-margin produce. The company's stock price has appreciated approximately by 20.3% since our coverage. This is because the thesis is playing out. Value Don’t Lie shares a similar outlook in their recent coverage of UNFI.

United Natural Foods, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held UNFI at the end of the first quarter which was 28 in the previous quarter. While we acknowledge the potential of UNFI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.