US Foods Holding: A Missed Opportunity or a Chance to Rebound?

US Foods Holding (USFD) reported its full-year 2024 earnings on February 14, 2025, with adjusted earnings per share (EPS) of $2.05, missing analyst estimates by 15%. Revenue was in line with analyst estimates, but the earnings miss raised concerns among investors. The company's share price fell by 4.5% to $66.77 on the day of the announcement.



The earnings miss can be attributed to higher expenses, which increased by 6.6% compared to the prior year, driven by an increase in total case volume and higher distribution costs. Operating expenses as a percentage of net sales were 13.9%, up from 13.2% in the prior year. The increase in expenses negatively impacted the company's profit margin, which decreased to 1.3% from 1.4% in the previous year.



Despite the earnings miss, US Foods Holding maintained its long-term growth targets. The company projects net sales growth of 4% to 6% in 2025, with adjusted EPS growth between 17% and 23%. The company also expects Adjusted EBITDA growth of 8% to 12% in 2025.

The earnings miss may have negatively impacted investor sentiment, but analysts remain optimistic about the company's long-term prospects. US Foods Holding has an average rating of 'Buy' from 16 analysts, with an average price target of $80.73.



In conclusion, US Foods Holding's earnings miss in 2024 was driven by higher expenses, which negatively impacted the company's profit margin. Despite the miss, the company maintained its long-term growth targets, and analysts remain optimistic about the company's prospects. Investors should consider the company's long-term growth potential and the potential for a rebound in earnings as they evaluate the stock.