US Foods
USFD
$103.61
+0.77%
US Foods Holding Corp. is one of the largest domestic foodservice distributors in the United States, selling and distributing more than 350,000 food and nonfood products to roughly 250,000 customer locations — independent restaurants (33% of fiscal 2025 sales), chain restaurants (23%), healthcare and hospitality clients (27%), and education/government accounts (17%) — through a physical network of 76 distribution facilities, 14 broadline production centers, and 98 Chef'Store cash-and-carry locations, generating about $39 billion in fiscal 2025 sales. It is a scale player in a structurally fragmented industry where it holds roughly a 10% share, competing primarily against Sysco on national breadth while defending against regional and specialty distributors through private-label penetration, supply-chain density, and its cash-and-carry format. The current investor narrative centers on a multi-year margin-recovery and capital-return story: management has been converting cost discipline and private-brand mix into EBITDA growth, funding an aggressive buyback (roughly $370 million repurchased in the June 2026 quarter alone) and debt reduction, while the stock's 33% one-year gain reflects the market rewarding that execution. The debate now is whether the margin runway is largely captured — Q2 fiscal 2026 gross margin of 18.2% and operating margin of 4.2% are near cyclical highs — and whether volume growth can offset a softer restaurant demand backdrop, a tension visible in the sharp September-to-October round trip in the share price.…
USFD
US Foods
$103.61
Investment Opinion: Should I buy USFD Today?
Based on the synthesized data, USFD earns a Buy rating with a 12-month horizon. The core thesis is that the company is executing a margin-recovery story, with forward valuation (18.2x PE) that is attractive relative to growth (PEG 0.56) and a consensus analyst target of $116.27 implying 15.2% upside. The recent 33% one-year gain and strong relative strength suggest momentum is intact, and the balance sheet, while levered, is supported by robust free cash flow of $946 million TTM.
Supporting evidence includes: 1) Revenue growth of 4.46% YoY in Q2 2026, with sequential acceleration; 2) Gross margin expansion to 18.22% from 17.20% in Q1, and operating margin improvement to 4.21% from 2.25%; 3) Free cash flow of $946 million TTM, enabling $370 million in buybacks in Q2 alone; 4) Forward PE of 18.23x, which is below the trailing PE of 25.63x and near the low end of the historical range; and 5) Analyst consensus rating of 1.53 (Buy) with a target price of $116.27. These metrics collectively suggest the stock is reasonably valued with upside potential.
Key risks that could invalidate the thesis include a demand slowdown in independent restaurants, margin compression from cost inflation, and high leverage limiting financial flexibility. The rating would upgrade to a stronger Buy if forward PE compresses below 16x or if revenue growth accelerates above 6%. It would downgrade to Hold if gross margins fall below 17% or if revenue growth decelerates below 3%. Relative to its history and peers, USFD appears fairly valued to slightly undervalued on forward earnings, but the premium on book value warrants caution. Overall, the risk/reward is favorable for investors with a medium-term horizon.
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USFD 12-Month Price Forecast
The forward-looking view is bullish, supported by the company's margin recovery, strong cash generation, and attractive forward valuation. The stock's relative strength and analyst sentiment reinforce the positive outlook, though the wide target range and thin margins warrant a medium confidence level. An upgrade to high confidence would require sustained volume growth and further margin expansion, while a downgrade to neutral would occur if gross margins fall below 17% or if revenue growth stalls.
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 +12.0% versus the current price.
Average Target
$116.00
0 analysts
Implied Upside
+12.0%
vs. current price
Analyst Count
—
covering this stock
Price Range
$65 - $130
Analyst target range
Coverage is solid, with 15 analysts and a consensus recommendation of "buy" (mean rating 1.53 on a 1-to-5 scale where 1 is Strong Buy). The average target price of $116.27 implies roughly +15.2% upside from the current $100.91, and the consensus EPS estimate of $9.09 against estimated revenue of $50.58 billion (range $50.02–$51.32 billion) points to continued top-line and earnings growth. The bullish tilt is corroborated by the institutional ratings tape: BTIG, UBS, Wells Fargo, TD Cowen, Citigroup, and Guggenheim all reiterated Buy/Overweight ratings on August 7, 2026, following Q2 results, while JP Morgan and Piper Sandler remain Neutral — a distribution that leans clearly positive but with a meaningful skeptical minority.
The target range of $65 to $130 is wide — the high target is roughly double the low — signaling genuine disagreement about the margin trajectory and demand environment rather than a consensus view. The $130 high implies multiple expansion toward the upper end of the historical PE band alongside continued EBITDA growth and buyback-driven EPS accretion; the $65 low effectively prices in margin compression and a demand downturn that stalls the earnings recovery. Notably, no firm has upgraded or downgraded in the recent tape — all actions are reiterations — suggesting analysts are in a holding pattern awaiting the next data point, and the 5.38 short ratio indicates bears are still positioned. With a tight cluster of Buy ratings but a wide price-target spread, the signal is moderately bullish with above-average uncertainty; the recent 3% single-day drop from $104 toward $101 is a reminder that the stock can undershoot consensus targets in the near term even when the fundamental thesis holds.
Bulls vs Bears: USFD Investment Factors
The bull case for USFD rests on tangible margin expansion, strong free cash flow, and an attractive forward valuation (18.2x PE, 0.56 PEG) that suggests the market is not fully pricing in continued execution. The bear case highlights thin margins, leverage, and a wide analyst target range that reflects uncertainty about the sustainability of margin gains and volume growth. Currently, the bull evidence appears stronger: the company has demonstrated consistent margin improvement, robust cash generation, and positive analyst sentiment, with the stock outperforming the market. However, the most important tension is whether margin expansion can continue amid a softer restaurant demand backdrop—if volumes decline, the operating leverage that has driven earnings growth could reverse. This factor will likely determine whether the stock reaches the bull target of $130 or falls toward the bear target of $65.
Bullish
- Margin expansion driving EBITDA growth: Q2 2026 gross margin rose to 18.22% from 17.20% in Q1 and 17.55% in Q4 2025, while operating margin jumped to 4.21% from 2.25% in Q1. EBITDA grew to $564 million (5.36% margin) from $489 million (4.85%) a year earlier, demonstrating operating leverage.
- Attractive forward valuation and PEG: Forward PE of 18.23x represents a 29% discount to the trailing PE of 25.63x, implying expected EPS growth. The PEG ratio of 0.56 suggests the stock is cheap relative to its growth rate, especially compared to its historical PE range of 14.5x to over 60x.
- Strong relative performance and momentum: USFD has outperformed the S&P 500 by 19.93% over the past year and 23.75% YTD, with a 33.06% gain versus 13.13% for the index. The recent 7.43% one-month surge versus -1.02% for SPY indicates re-accelerating momentum.
- Robust free cash flow and capital returns: TTM free cash flow is $946 million, with Q2 2026 FCF of $355 million on operating cash flow of $431 million. The company repurchased $370 million of shares in Q2 alone, reducing share count and boosting EPS.
Bearish
- Thin margins vulnerable to cost pressures: Net margin is only 1.71% and operating margin 3.13% on a trailing basis, leaving little cushion for cost inflation or demand slowdown. Q2 net margin of 2.61% is an improvement but still thin for a distributor.
- High leverage and low cash cushion: Debt-to-equity is 1.33x and interest coverage is 5.75x, which is adequate but not fortress-like. With only $56 million in cash, the company relies on continued cash generation to fund buybacks and debt reduction.
- Wide analyst target dispersion signals uncertainty: Target prices range from $65 to $130, a 2x spread, indicating genuine disagreement about margin trajectory and demand. The low target of $65 implies a 35.6% downside from current levels.
- Technical resistance and recent selloff: The stock fell 3.02% on October 23 on elevated volume, rejecting at the $104 level. It remains below the 52-week high of $111.42, and the September drawdown of 17% shows vulnerability to sharp corrections.
USFD Technical Analysis
USFD is in a sustained, broad uptrend: the stock is up 33.06% over the trailing year and 35.20% year-to-date, decisively outperforming the S&P 500's 13.13% and 11.45% over the same windows (relative strength of +19.93% and +23.75%, respectively). At $100.91, the shares sit at roughly 75% of the 52-week range of $69.875–$111.42 — below the highs but far off the lows — a positioning that signals healthy trend momentum rather than either overextension or distress. The 21.09% maximum drawdown over the period confirms this has been a stair-step advance punctuated by sharp corrections rather than a low-volatility grind, which matters for entry timing.
Short-term momentum is re-accelerating after a mid-quarter shakeout: the stock is +7.43% over the past month versus -1.02% for SPY (relative strength +8.45%), and +3.85% over three months versus +2.85% for the index. That one-month surge follows a violent September drawdown from the August high of $111.42 to $92.01 on September 15 — a roughly 17% peak-to-trough slide — meaning the current rally is a recovery leg off support rather than a fresh breakout. The most recent session is a warning flag, however: the stock fell 3.02% on October 23 on volume of 2.76 million shares, a sharp rejection right at the $104 level, suggesting sellers remain active near prior highs and the recovery is encountering supply.
Key technical levels are well defined: resistance sits at the $104–$111.42 zone, where the October rally stalled and where the 52-week high caps the range; a decisive close above $111.42 would confirm trend continuation and likely trigger momentum-based buying. Support rests at the September swing low near $92 and, more importantly, the 52-week low area around $69.875, which would represent a full trend failure if breached. With a beta of 0.857, USFD is roughly 14% less volatile than the market — a defensive characteristic that supports larger position sizing for risk-budgeted portfolios, though the 21.09% max drawdown shows the stock is not immune to sharp, concentrated selloffs.
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
+41.4%
Cumulative gain past year
| Period | USFD Return | S&P 500 |
|---|---|---|
| 1m | +12.4% | -0.9% |
| 3m | +3.0% | +1.2% |
| 6m | +11.4% | +4.9% |
| 1y | +41.4% | +11.2% |
| ytd | +38.8% | +10.8% |
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USFD Fundamental Analysis
Revenue is growing at a solid, steady clip: Q2 fiscal 2026 (quarter ended June 27, 2026) revenue reached $10.532 billion, up 4.46% year-over-year from $10.082 billion, and up sequentially from $9.610 billion in Q1. The multi-quarter trend is one of consistent mid-single-digit expansion — Q1 2026 revenue of $9.610 billion grew 2.8% over Q1 2025's $9.351 billion, while Q4 2025's $9.800 billion grew 3.3% over Q4 2024's $9.491 billion — indicating growth is modestly accelerating rather than decelerating. Within the segment disclosure, the largest product line at $3.767 billion plus the next two at $1.791 billion and $1.740 billion account for the bulk of the mix, and the breadth of the book (no single line above roughly 36% of disclosed product revenue) supports the resilience of the top line. For the investment case, the implication is that USFD is a share-gainer in a low-growth category, and the 4.5% top-line pace is enough to leverage fixed distribution costs.
Profitability is real but thin, as is typical of food distribution: Q2 2026 net income was $275 million on a 2.61% net margin, with gross margin of 18.22% and operating margin of 4.21%. Margins are expanding — gross margin rose from 17.20% in Q1 2026 and 17.55% in Q4 2025 to 18.22% in Q2, while operating margin climbed from 2.25% in Q1 to 4.21% in Q2, and net income of $275 million compares favorably to $224 million in the year-ago Q2. The year-over-year comparison is also favorable on quality: Q2 2026 EBITDA of $564 million (5.36% margin) versus $489 million (4.85%) a year earlier shows operating leverage flowing through. The caveat is that the 1.71% trailing net margin and 3.13% operating margin in the key-metrics snapshot reflect the seasonally weak first half, so investors should judge the business on the full-year trajectory rather than any single quarter.
Balance-sheet and cash-flow health is adequate but levered: debt-to-equity stands at 1.33x, the current ratio at 1.16, and interest coverage at roughly 5.75x in Q2 — comfortable but not fortress-like for a low-margin distributor. Free cash flow is robust at $946 million TTM, with Q2 2026 FCF of $355 million on operating cash flow of $431 million against $76 million of capex, and the company is returning cash aggressively ($370 million of buybacks in Q2, $75 million in Q1). ROE of 15.70% and ROA of 5.83% are respectable for the industry and are flattered by leverage (equity multiplier of 3.35x), while the 0.44x price-to-sales and 12.66x price-to-cash-flow suggest the market is not paying up for those returns. The key risk is that with only $56 million of cash on the balance sheet, growth and buybacks depend on continued internal cash generation — which the 82% FCF conversion of operating cash flow supports, but leaves little cushion if working capital swings.
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 USFD is profitable (Q2 2026 net income of $275 million; trailing EPS positive), the PE ratio is the appropriate primary metric. The stock trades at 25.63x trailing earnings but only 18.23x forward earnings — a roughly 29% compression that implies the market expects meaningful EPS growth, consistent with the consensus estimate of $9.09 for the forward period versus the current run-rate. The PEG ratio of 0.56 reinforces that the forward multiple is cheap relative to expected growth, though the trailing PE is distorted upward by the seasonally weak first half (Q1 EPS of $0.53 versus Q2's $1.26).
Against its industry, USFD screens cheap on sales-based measures: price-to-sales of 0.44x and EV/sales of 0.68x are typical of thin-margin distribution but sit at the low end even for that cohort, while EV/EBITDA of 13.82x is a mid-teens multiple that reflects the leverage in the capital structure. The 4.03x price-to-book is elevated relative to the 1.7x–2.3x range the stock commanded in 2021–2022, but that reflects the re-rating of a business whose ROE has roughly quintupled from ~1.6% to 15.7%. On balance, the valuation is a premium to the stock's own history on book and earnings but a discount on forward earnings and growth-adjusted terms — the market is paying for improved returns without extrapolating them indefinitely.
Historically, USFD's PE has ranged from roughly 14.5x (Q2 2023) to over 60x (Q4 2024, a depressed-earnings quarter), with the current 25.6x trailing sitting in the middle-to-upper portion of that band; the forward 18.2x, however, is near the low end of the historical range. Price-to-sales of 0.44x is far below the 1.0x–2.1x readings seen from 2021 through mid-2026, a gap explained by the market-cap figure used in the current snapshot versus the historical ratio series — investors should treat the PS comparison with caution. The cleaner read is the forward PE and PEG: at 18.2x forward and 0.56x PEG, the stock is priced for continued execution but not for perfection, leaving room for multiple expansion if margin gains persist.
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
USFD faces financial and operational risks stemming from its thin margins and leveraged balance sheet. With a net margin of just 1.71% and operating margin of 3.13% on a trailing basis, the company has limited buffer against cost inflation or volume declines. Debt-to-equity of 1.33x and interest coverage of 5.75x are manageable but leave little room for error, especially with only $56 million in cash. Additionally, revenue concentration in independent restaurants (33% of sales) exposes USFD to discretionary dining trends, and a slowdown could pressure volumes and margins simultaneously.
Market and competitive risks include valuation compression if growth expectations are not met. The stock trades at 25.6x trailing earnings, which is in the upper half of its historical range, and a premium to some peers on book value (P/B of 4.03x). With a beta of 0.857, USFD is less volatile than the market, but sector rotation away from consumer defensives or a broad market downturn could still impact the shares. Competitive pressures from Sysco and regional distributors could limit pricing power, and any loss of major chain customers would be a significant blow. Recent news is absent, but the wide analyst target range ($65-$130) underscores the uncertainty around margin sustainability.
In a worst-case scenario, a combination of declining restaurant traffic, margin compression from cost inflation, and a leveraged balance sheet could trigger a sharp selloff. The 52-week low of $69.875 represents a 30.8% decline from the current price of $100.91, and the analyst low target of $65 implies a 35.6% downside. Such a scenario could unfold if Q3 earnings miss expectations, leading to downgrades and multiple compression. Investors could lose over 30% in this adverse case, highlighting the importance of monitoring volume trends and margin metrics.
FAQ
The key risks include: 1) Financial risk from thin margins (net margin 1.71%) and high leverage (debt-to-equity 1.33x), which could strain if cash flow declines; 2) Competitive risk from Sysco and regional distributors, potentially limiting pricing power and market share; 3) Macro risk from a slowdown in restaurant traffic, especially independent restaurants (33% of sales), which could reduce volumes; and 4) Company-specific risk from the wide analyst target range ($65-$130), indicating uncertainty about margin sustainability. The most severe is a demand downturn that compresses margins and triggers multiple compression, potentially leading to a 30%+ decline.
The 12-month forecast has three scenarios: Bull case (25% probability) with a target range of $116-$130, driven by margin expansion and revenue acceleration; Base case (55% probability) with a target range of $108-$120, assuming steady execution and 4-5% revenue growth; and Bear case (20% probability) with a target range of $65-$85, reflecting a demand slowdown and margin compression. The most likely is the base case, with the stock reaching the analyst average target of $116.27, implying 15.2% upside. The key assumption is that gross margins remain around 18% and revenue grows mid-single digits.
USFD appears undervalued on forward earnings, trading at 18.23x forward PE compared to its trailing PE of 25.63x, which implies expected EPS growth. The PEG ratio of 0.56 suggests the stock is cheap relative to its growth rate. However, on a price-to-book basis (4.03x), it is elevated compared to its historical range of 1.7x-2.3x, reflecting improved ROE. The market is paying a fair price for the margin recovery story, with room for multiple expansion if execution continues. Relative to peers, the PS ratio of 0.44x is low for the distribution sector, indicating potential undervaluation on sales.
USFD appears to be a good buy for investors with a medium-term horizon, given the 15.2% upside to the analyst average target of $116.27 and the attractive forward PE of 18.23x. The company has demonstrated strong margin expansion and free cash flow generation, supporting its Buy rating. However, the thin net margin of 1.71% and high leverage (debt-to-equity 1.33x) mean it is not without risk. The biggest downside risk is a demand slowdown that could compress margins, with the bear case target of $65 representing a 35.6% decline. Overall, it is a good buy for those comfortable with moderate risk and seeking exposure to a defensive growth story.
USFD is suitable for both, but leans toward medium-to-long-term holding given its growth stage and volatility. The beta of 0.857 indicates lower volatility than the market, making it appropriate for long-term investors seeking defensive growth. However, the 21.09% max drawdown and recent 17% peak-to-trough decline show it can experience sharp corrections, so short-term traders could capitalize on volatility. The lack of dividend (payout ratio 0) means returns rely on price appreciation and buybacks. A suggested minimum holding period is 12-18 months to allow the margin recovery story to fully play out and to ride through potential demand fluctuations.