US Foods
USFD
$92.01
-2.94%
US Foods Holding Corp. is a leading U.S. foodservice distributor, supplying more than 350,000 food and nonfood products to roughly 250,000 customer locations — independent and chain restaurants, healthcare and hospitality operators, education and government accounts — through a network of 76 distribution facilities, 14 broadline production centers, and 98 Chef'Store cash-and-carry locations, generating approximately $39 billion in fiscal 2025 sales. The company holds roughly a 10% share of a highly fragmented industry, positioning it as a scale player whose density-based route economics and private-label penetration are its principal competitive moats against Sysco and regional distributors. The current investor narrative centers on a sharp sentiment reversal: after a spring drawdown tied to soft restaurant traffic and margin concerns, the stock rallied to new highs in August on the back of accelerating profit growth, aggressive share repurchases, and optimism around the pending acquisition of Performance Food Group, which would create a combined entity with materially greater scale and purchasing leverage. Debate now hinges on whether synergy capture and cost discipline can offset the integration risk and leverage inherent in that transformative deal, with the recent pullback from the highs reflecting renewed caution on valuation and deal execution.…
USFD
US Foods
$92.01
Investment Opinion: Should I buy USFD Today?
The synthesized recommendation is Hold with a constructive bias. The core thesis is that USFD offers a 21.5% upside to the $115.875 consensus target backed by a 17.3x forward PE and 0.56 PEG, but the recent 14.06% one-month decline, -13.00% relative strength, and 113%-wide analyst target range argue against chasing the stock until deal and margin milestones clarify. With 16 analysts covering the name and a consensus that skews positive but includes Neutral ratings from Piper Sandler and JP Morgan, the risk/reward is balanced rather than compelling at $95.34.
Supporting evidence for the Hold: the forward PE of 17.3x on $8.48 consensus EPS is reasonable for a defensive distributor, and the 0.56 PEG signals the stock is inexpensive relative to expected growth. Trailing free cash flow of $848 million yields roughly 4.9% against the $17.3 billion market cap, and Q1 2026 generated $196 million of FCF while returning $75 million via buybacks and $77 million of debt repayment. Profitability is improving — Q1 2026 net income of $116 million versus $115 million a year ago on 2.77% revenue growth — and ROE of 15.70% is respectable. However, the PS ratio of 0.44x is near the low end of its four-year range (0.74x–2.08x), the PB of 4.03x is near the high end, and gross margin slipped sequentially from 17.55% to 17.2%, so the valuation picture is mixed rather than uniformly cheap.
The biggest risks that could invalidate the thesis are: (1) PFG integration costs and leverage exceeding expectations, which would pressure the 1.33x debt-to-equity and $75 million quarterly interest burden; (2) gross margin failing to hold above 17%, which would undermine the forward EPS estimate of $8.48; and (3) continued restaurant traffic weakness hitting the 33% independent-restaurant and 23% chain-restaurant revenue pools. This Hold would upgrade to Buy if the stock stabilizes above the $90–$92 support shelf and gross margin recovers above 17.5%, or downgrade to Sell if revenue growth decelerates below 2% or the shares break below $90. On balance, USFD is fairly valued relative to its history and peers — not a bargain, but not stretched either.
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USFD 12-Month Price Forecast
USFD presents a balanced risk/reward at $95.34: the 17.3x forward PE and 0.56 PEG are attractive for a defensive distributor with 15.70% ROE and $848 million in trailing free cash flow, and the 21.5% upside to the $115.875 consensus target is meaningful. However, the 14.06% one-month decline, sequential gross margin compression from 17.55% to 17.2%, and 1.33x debt-to-equity with $75 million quarterly interest expense create real near-term risk, especially with the PFG acquisition adding integration and leverage uncertainty. The stock's 0.819 beta and 4.9% FCF yield make it a reasonable defensive holding, but the 113%-wide analyst target range means position sizing should reflect genuine two-sided risk. I would upgrade to bullish if the stock holds the $90–$92 support shelf and gross margin recovers above 17.5%, and downgrade to bearish if revenue growth falls below 2% or the shares break below $90.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on US Foods's 12-month outlook, with a consensus price target around $115.88 and implied upside of +25.9% versus the current price.
Average Target
$115.88
0 analysts
Implied Upside
+25.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$61 - $130
Analyst target range
Coverage is robust with 16 analysts, and the consensus average target price of $115.875 implies roughly 21.5% upside from the current price of $95.34, a bullish signal that stands in sharp contrast to the stock's recent 14.06% one-month decline. The recommendation distribution skews positive — recent actions include Buy ratings from Citigroup and BTIG (May 2026), Overweight from Barclays and Wells Fargo (February 2026), and Outperform from BMO Capital — though the presence of Neutral ratings from Piper Sandler and JP Morgan, and notably Piper Sandler's downgrade from Overweight to Neutral in February 2026, indicates that not all analysts share the bullish conviction. The consensus leans bullish, but the recent price action suggests the market is testing that thesis, and the gap between the average target and the current price represents the market's skepticism about near-term execution. The target range is exceptionally wide, from a low of $61.00 to a high of $130.00 — a spread of more than 113% of the current price — which signals unusually high uncertainty about the company's trajectory, likely reflecting divergent views on the Performance Food Group acquisition, integration risk, and the sustainability of margin expansion. The high target of $130 assumes successful synergy capture, multiple expansion toward historical peaks, and accelerating EPS growth toward the $8.48 consensus estimate; the low target of $61 prices in margin compression, deal-related leverage stress, or a consumer-spending downturn that would hit restaurant traffic. The wide dispersion, combined with the recent downgrade to Neutral and the absence of any recent upgrades, suggests analysts are in a wait-and-see posture ahead of deal milestones and the next earnings print, and investors should treat the consensus target as a directional signal rather than a precise forecast.
Bulls vs Bears: USFD Investment Factors
The bear case currently has stronger near-term evidence: a 14.06% one-month decline, -13.00% relative strength versus the S&P 500, sequential gross margin compression from 17.55% to 17.2%, and a 113%-wide analyst target range all point to a market that has lost confidence in the near-term story. The bull case rests on more durable fundamentals — a 17.3x forward PE, 0.56 PEG, $848 million in trailing free cash flow, and a 21.5% consensus target upside — but these are medium-term supports, not near-term catalysts. The single most important tension is whether the pending Performance Food Group acquisition can deliver synergy capture and purchasing leverage without straining a balance sheet already carrying 1.33x debt-to-equity and $75 million in quarterly interest expense. If the deal closes cleanly and margins stabilize above 17.5%, the stock likely re-rates toward the $115.875 consensus; if integration stumbles or restaurant traffic weakens further, the $90–$92 support shelf and ultimately the $69.875 52-week low come into play.
Bullish
- Analyst consensus implies 21.5% upside: The 16-analyst consensus average target price of $115.875 sits 21.5% above the current $95.34, with recent Buy ratings from Citigroup and BTIG (May 2026) and Outperform from BMO Capital. This gap between street targets and market price suggests the recent 14.06% one-month decline is sentiment-driven rather than fundamentally justified.
- Forward PE of 17.3x is undemanding: On consensus FY EPS of $8.48, USFD trades at a forward PE of just 17.3x versus a trailing PE of 25.6x, implying roughly 48% earnings growth over the next twelve months. The PEG ratio of 0.56 is well below 1.0, a classic signal of a stock priced cheaply relative to its expected growth rate.
- Margin expansion is materializing: Q1 2026 net income of $116 million edged above the prior-year $115 million despite only 2.77% revenue growth, and trailing ROE of 15.70% and ROA of 5.83% reflect cumulative margin and buyback benefits. The company is proving it can grow profits faster than sales in a low-growth distribution model.
- Solid free cash flow and capital returns: Trailing free cash flow of $848 million against a $17.3 billion market cap implies a roughly 4.9% FCF yield, and Q1 2026 alone generated $196 million of FCF ($294 million operating cash flow less $98 million capex). Management returned $75 million via buybacks and $77 million of debt repayment in the quarter, shrinking the share count from 234 million diluted a year ago to 223.4 million.
Bearish
- Severe one-month momentum breakdown: USFD has fallen 14.06% over the past month versus a 1.06% decline in the S&P 500, producing a relative strength of -13.00%. The stock is now 14.4% below its August 52-week high of $111.42, and the failure to hold that level marks the first serious test of the rally's durability.
- Razor-thin and inconsistent margins: Q1 2026 gross margin of 17.2% declined from 17.55% in Q4 2025, and operating margin is just 2.25% with a net margin of 1.21%. In an industry where a single point of margin matters enormously, this sequential compression suggests input-cost pass-through and mix are not yet delivering consistent expansion.
- Leverage and interest burden constrain flexibility: Debt-to-equity of 1.33x and $75 million of quarterly interest expense mean the company depends on consistent cash generation to fund both growth capex and its buyback program. The pending Performance Food Group acquisition would likely add further leverage, raising integration and balance-sheet risk.
- Wide analyst dispersion signals uncertainty: The target range spans $61 to $130 — a spread of more than 113% of the current price — reflecting deeply divergent views on the PFG deal, integration risk, and margin sustainability. Piper Sandler's downgrade from Overweight to Neutral in February 2026 and the absence of any recent upgrades suggest analysts are in a wait-and-see posture.
USFD Technical Analysis
US Foods is in a sustained uptrend that has recently stalled: the shares are up 19.37% over the past year and 27.73% year-to-date, with the current price of $95.34 sitting at roughly 61% of the 52-week range between the $69.875 low and $111.42 high. That mid-to-upper range positioning signals a stock that has given back a meaningful portion of its momentum but has not broken its longer-term uptrend structure. The 52-week high of $111.42 was set in mid-August, and the failure to hold that level marks the first serious test of the rally's durability. Recent momentum has deteriorated sharply and diverges from the longer-term trend: the stock is down 14.06% over the past month versus a 2.16% gain over three months and a 0.75% gain over six months, while the S&P 500 fell only 1.06% in the same one-month window, producing a relative strength of -13.00%. This negative divergence — a strong 1-year trend colliding with a steep 1-month decline — typically signals either a healthy mean-reversion pullback within an uptrend or the early stage of a trend reversal, and the burden of proof now sits with the bulls to defend the $95 area. Key levels are well defined: support rests at the $95 psychological zone and, more importantly, the $90–$92 shelf that contained the March–April consolidation, with the 52-week low of $69.875 as the ultimate floor; resistance sits at the August high of $111.42, and a decisive breakout above that level would confirm trend resumption and likely target new highs, while a breakdown below $90 would threaten the year-to-date gains and open the door toward the mid-$80s. With a beta of 0.819, USFD is roughly 18% less volatile than the broader market, which argues for larger position sizes per unit of market risk but also means the stock will likely lag in a sharp risk-on rally; the 21.09% maximum drawdown over the past year underscores that even low-beta defensive names can experience meaningful air pockets.
Beta
0.82
0.82x market volatility
Max Drawdown
-21.1%
Largest decline past year
52-Week Range
$70-$111
Price range past year
Annual Return
+16.0%
Cumulative gain past year
| Period | USFD Return | S&P 500 |
|---|---|---|
| 1m | -15.5% | -2.4% |
| 3m | -1.9% | +2.2% |
| 6m | +3.0% | +14.8% |
| 1y | +16.0% | +14.6% |
| ytd | +23.3% | +11.1% |
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USFD Fundamental Analysis
US Foods' revenue trajectory is steady but unspectacular: fiscal Q1 2026 (ended March 28, 2026) revenue came in at $9.61 billion, up 2.77% year-over-year from $9.351 billion in the prior-year quarter, continuing a pattern of low-single-digit top-line growth across recent periods (Q4 2025: $9.80 billion; Q3 2025: $10.19 billion; Q2 2025: $10.08 billion). The sequential decline from the September 2025 quarter reflects normal seasonality rather than demand deterioration, but the modest 2.77% growth rate confirms that US Foods is a share-gain and inflation-pass-through story rather than a volume-growth story, with independent restaurants (33% of sales) and healthcare/hospitality (27%) providing the most resilient demand pools. For the investment case, this means the equity story rests almost entirely on margin expansion, cost leverage, and capital returns rather than revenue acceleration — a dynamic that raises the stakes on execution. Profitability is thin but improving: Q1 2026 net income was $116 million on a 1.21% net margin, with gross margin of 17.2% and operating margin of just 2.25%, levels that are structurally low but typical for the razor-thin foodservice distribution industry. The year-over-year comparison is favorable — Q1 2025 net income was $115 million on a 1.23% net margin — and the trailing twelve-month picture is stronger, with ROE of 15.70% and ROA of 5.83% reflecting the cumulative effect of margin initiatives and buybacks; however, the sequential decline in gross margin from 17.55% in Q4 2025 to 17.2% in Q1 2026 bears watching, as it suggests input-cost pass-through and mix are not yet delivering consistent expansion. Balance sheet and cash flow metrics are adequate but not fortress-like: debt-to-equity stands at 1.33x, the current ratio is 1.16, and trailing free cash flow is $848 million, which against a $17.3 billion market cap implies a roughly 4.9% FCF yield — solid for a defensive distributor. Q1 2026 operating cash flow was $294 million against $98 million of capex, yielding $196 million of free cash flow, while the company returned capital via $75 million of buybacks and $77 million of debt repayment; the cash conversion cycle of roughly 10.5 days and inventory turnover near 4.7x reflect efficient working capital management, but the 1.33x leverage and $75 million quarterly interest expense mean the company remains dependent on consistent cash generation to fund both growth capex and its ambitious buyback program.
Quarterly Revenue
$9.6B
2026-03
Revenue YoY Growth
+2.8%
YoY Comparison
Gross Margin
17.2%
Latest Quarter
Free Cash Flow
$848000000.0B
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 — Q1 2026 net income of $116 million and trailing EPS of $0.039 (distorted by quarterly timing) — the PE ratio is the appropriate primary metric, and the trailing PE of 25.6x against a forward PE of 17.3x implies the market expects earnings to grow roughly 48% over the next twelve months, a gap that reflects both the low base of trailing earnings and genuine optimism about margin recovery and buyback-driven EPS accretion. The forward PE of 17.3x on consensus EPS of $8.48 is the more economically meaningful figure and frames the stock as reasonably valued for a defensive distributor with mid-single-digit growth. On a peer-relative basis, USFD trades at a PS ratio of 0.44x and an EV/Sales of 0.65x, both of which are low in absolute terms but consistent with the thin-margin distribution model; the EV/EBITDA of 13.8x is the more comparable metric and sits at a modest premium to where the stock has historically traded, reflecting the market's willingness to pay up for the improving margin narrative. The PEG ratio of 0.56 is notably below 1.0, suggesting the stock is inexpensive relative to its expected earnings growth rate, though the reliability of that signal depends on the sustainability of the forward EPS estimate. Historically, USFD's PE has ranged from the low teens (14.5x in Q2 2023) to over 60x in depressed-earnings quarters, with the current 25.6x trailing PE sitting in the middle-to-upper portion of that band; the PS ratio of 0.44x, however, is near the low end of its historical range (which has run from roughly 0.74x to 2.08x over the past four years), a divergence that suggests the market is pricing in margin expansion rather than revenue growth. The PB ratio of 4.03x is near the top of its multi-year range (versus 1.7x–2.7x in 2021–2022), reflecting both accumulated earnings and the balance-sheet impact of buybacks; taken together, the valuation picture is one of a stock that is not cheap on book value or trailing earnings but appears reasonably priced on forward earnings and growth-adjusted metrics, leaving limited margin for execution error.
PE
25.6x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 14x~45x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
13.8x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on US Foods' structurally thin margins and rising leverage. Q1 2026 gross margin of 17.2% declined from 17.55% in Q4 2025, operating margin is just 2.25%, and net margin is 1.21% — meaning a mere 100 basis points of gross margin erosion would wipe out roughly 40% of operating profit. Debt-to-equity stands at 1.33x with $75 million of quarterly interest expense, and the pending Performance Food Group acquisition would likely increase leverage further, potentially pressuring the current ratio of 1.16 and limiting the flexibility that funded $75 million of quarterly buybacks. Revenue concentration adds another layer: independent restaurants (33% of sales) and healthcare/hospitality (27%) are the most resilient pools, but chain restaurants (23%) are exposed to traffic weakness, and the 2.77% year-over-year revenue growth means the equity story depends almost entirely on margin expansion and cost leverage rather than top-line acceleration.
Market and competitive risks are amplified by the stock's recent momentum breakdown and premium book valuation. USFD has fallen 14.06% over the past month versus a 1.06% S&P 500 decline, producing -13.00% relative strength, and the shares sit 14.4% below the August high of $111.42. The PB ratio of 4.03x is near the top of its multi-year range (versus 1.7x–2.7x in 2021–2022), and the EV/EBITDA of 13.8x carries a premium to historical levels, leaving little cushion if margin execution disappoints. Competition from Sysco and regional distributors in a fragmented industry with only ~10% share means pricing power is limited, and with a beta of 0.819 the stock is less volatile than the market but still vulnerable to sector rotation away from defensive consumer names if rates stay elevated. The absence of recent news flow and the wide $61–$130 analyst target range underscore how much the market's view hinges on unproven deal synergies.
The worst-case scenario is a chain of events in which the PFG acquisition closes with higher-than-expected integration costs and leverage, restaurant traffic deteriorates further, and gross margin slips below 17%, forcing analysts to cut forward EPS estimates toward the low end of the $8.36–$8.65 range. In that scenario, the stock could retest the $90–$92 March–April support shelf and, if that breaks, fall toward the mid-$80s and potentially the $69.875 52-week low — a decline of roughly 26.7% from the current $95.34. The analyst low target of $61 implies a steeper 36% downside, and the 21.09% maximum drawdown over the past year shows that even this low-beta defensive name can experience meaningful air pockets. Investors should size positions accordingly, recognizing that the downside case is not remote given the 113%-wide target dispersion.
FAQ
The most severe risk is margin compression: gross margin slipped from 17.55% in Q4 2025 to 17.2% in Q1 2026, and with operating margin at just 2.25%, a 100 basis point decline would erase roughly 40% of operating profit. Second is balance-sheet leverage from the PFG acquisition, with debt-to-equity already at 1.33x and $75 million in quarterly interest expense. Third is restaurant traffic weakness hitting the 33% independent and 23% chain restaurant revenue pools, which could keep revenue growth below the current 2.77%. Fourth is valuation risk, with the PB of 4.03x near multi-year highs and the 113%-wide analyst target range reflecting genuine disagreement about the company's trajectory.
The base case (50% probability) targets $100–$116 over twelve months, assuming revenue growth stays at 2–3%, gross margin stabilizes around 17.2–17.5%, and forward EPS tracks toward the $8.48 consensus, with the stock recovering toward the $115.875 average target. The bull case (25% probability) targets $115–$130 if the PFG deal closes with strong synergies and gross margin recovers above 17.5%. The bear case (25% probability) targets $61–$90 if integration costs overwhelm the balance sheet and gross margin falls below 17%, with the $61 analyst low representing the tail scenario. The base case is most likely, hinging on margin stability and deal execution.
USFD's valuation is mixed: the forward PE of 17.3x on $8.48 consensus EPS is reasonable for a defensive distributor, and the 0.56 PEG is well below 1.0, suggesting undervaluation relative to growth. The PS ratio of 0.44x is near the low end of its four-year range (0.74x–2.08x), which supports the undervaluation case. However, the PB ratio of 4.03x is near the top of its multi-year range (1.7x–2.7x in 2021–2022), and the EV/EBITDA of 13.8x carries a premium to historical levels. The market appears to be pricing in margin expansion and PFG synergies rather than revenue growth, so the stock is fairly valued on forward earnings but not cheap on book value.
From a risk/reward perspective, USFD is a reasonable but not compelling buy at $95.34. The 16-analyst consensus target of $115.875 implies 21.5% upside, and the 17.3x forward PE with a 0.56 PEG suggests the stock is inexpensive relative to expected 48% earnings growth. However, the 14.06% one-month decline, -13.00% relative strength versus the S&P 500, and 113%-wide target range ($61–$130) signal real uncertainty, particularly around the PFG acquisition and the 1.33x debt-to-equity. It is a good buy for patient, defensive investors who can tolerate a retest of the $90–$92 support shelf, but less suitable for those seeking near-term momentum or high growth.
USFD is better suited for long-term holding than short-term trading. Its beta of 0.819 makes it less volatile than the market, but the 21.09% maximum drawdown over the past year and the recent 14.06% one-month decline show it can still experience sharp air pockets. The absence of a dividend (0% yield, 0% payout ratio) means returns depend on capital appreciation and buybacks, which favor a multi-year horizon. Earnings visibility is moderate given the 2.77% revenue growth and thin margins, and the PFG acquisition adds integration uncertainty that will take several quarters to resolve. A suggested minimum holding period is 18–24 months to allow margin initiatives and deal synergies to materialize.