A slight miss on first-quarter earnings per share, coming in at $0.68 against analyst estimates of $0.69, has drawn attention to US Foods Holding Corp. (USFD) despite reporting a +4.5% year-over-year increase in total sales to $9.4 billion in the same period. This performance highlights the nuanced operational environment for major foodservice distributors, where top-line growth must contend with cost pressures and the fine margins inherent to the industry. The Q1 2025 results, announced in May 2025, underscore the company's ability to expand revenue but also the challenges in consistently translating that growth into bottom-line outperformance relative to market expectations, according to insights derived from Monexa AI data and earnings analysis cited by Seeking Alpha.
The context for this performance includes a competitive landscape marked by fluctuating commodity costs and evolving customer demands. While the +40.2% increase in net income to $115 million in Q1 2025 compared to the prior year quarter demonstrates significant improvement in profitability execution, the marginal EPS miss signals that operational efficiencies and cost management remain critical focal points. This dynamic is particularly relevant as the company continues to invest in strategic areas like sustainability and logistics optimization, which carry upfront costs but are intended to drive long-term value and resilience.
Navigating Recent Financial Performance#
Examining the full fiscal year 2024 results provides a broader perspective on US Foods's trajectory. The company reported total revenue of $37.88 billion for the year ended December 28, 2024, a +6.41% increase from $35.6 billion in fiscal year 2023. Gross profit also saw healthy growth, rising to $6.53 billion in 2024 from $6.15 billion in 2023. However, net income experienced a slight dip, moving from $506 million in 2023 to $494 million in 2024, a decrease of -2.37%. This divergence between revenue/gross profit growth and net income suggests that operating expenses or other costs outpaced gross profit gains during the year, a factor reflected in the marginal decrease in net margin from 1.42% in 2023 to 1.3% in 2024, based on Monexa AI financial data.
Stay ahead of market trends
Get comprehensive market analysis and real-time insights across all sectors.
Despite the slight contraction in net margin, operating income improved to $1.1 billion in 2024, up from $1.02 billion in 2023, indicating strength at the operational level before accounting for interest and taxes. EBITDA remained stable at approximately $1.4 billion for both fiscal years. These figures underscore the company's ability to drive operational efficiency and manage its core business profitability, even as external factors or specific investment cycles impact the final net income figure. The stability of EBITDA year-over-year, despite revenue growth, suggests some pressure points either in cost of goods sold or selling, general, and administrative expenses, which totaled $5.41 billion in 2024, up from $5.12 billion in 2023.
To provide a clearer view of the full-year performance trends, consider the following summary of key financial metrics:
| Metric | FY 2024 | FY 2023 | Change (YoY) |
|---|---|---|---|
| Total Revenue | $37.88B | $35.6B | +6.41% |
| Gross Profit | $6.53B | $6.15B | +6.18% |
| Operating Income | $1.1B | $1.02B | +7.84% |
| Net Income | $494MM | $506MM | -2.37% |
| EBITDA | $1.4B | $1.4B | 0.00% |
| Gross Profit Margin | 17.25% | 17.27% | -0.02 pp |
| Operating Margin | 2.90% | 2.86% | +0.04 pp |
| Net Margin | 1.30% | 1.42% | -0.12 pp |
Source: Monexa AI Financial Data
The slight decline in net income and net margin in 2024, despite revenue and operating income growth, warrants attention. This could be attributed to factors below the operating line, such as interest expense or taxes, or reflect specific one-time items. Comparing this to the three-year historical performance provides further perspective. US Foods has demonstrated robust growth over the past three years, with a revenue 3-year CAGR of +8.7%, net income 3-year CAGR of +44.42%, operating cash flow 3-year CAGR of +40.98%, and free cash flow 3-year CAGR of +79.1%, according to Monexa AI growth data. While the recent year's performance shows a moderation from these high historical growth rates, the underlying trend of top-line expansion and operational improvement appears to persist.
Strategic Focus: Sustainability and Operational Efficiency#
A significant recent development for US Foods is the release of its 2024 Sustainability Report in May 2025. The report highlighted substantial progress, including achieving over $1 billion in annual revenue from its sustainable product lines, Serve Good® and Progress Check®. This milestone underscores the growing market demand for environmentally and socially responsible products and US Foods' ability to capitalize on this trend. Furthermore, the company reported a 16% reduction in greenhouse gas emissions since 2019 and the addition of 47 electric vehicles to its fleet, supported by the installation of 65 fast-charging stations, demonstrating tangible steps towards sustainable logistics as detailed in the BusinessWire press release.
These sustainability initiatives are not merely environmental efforts; they are integral to the company's long-term strategy and competitive positioning. By investing in sustainable sourcing and logistics, US Foods aims to appeal to an increasingly conscious customer base, build brand loyalty, and potentially realize cost efficiencies in the long run through reduced fuel consumption and optimized operations. The $1 billion+ revenue figure from sustainable products provides concrete evidence that these efforts are translating into commercial success and are resonating with customers in the foodservice industry.
Operational efficiency is particularly critical in the current environment, influenced by external factors such as commodity prices. As of June 2025, WTI crude oil prices have seen a recent increase, rising to $66.52 per barrel, up +7.38% over the past month. This directly impacts transportation costs, a significant component of a distributor's expense structure. US Foods' focus on optimizing routes and expanding its fleet with more fuel-efficient or electric vehicles can help mitigate some of this pressure, although fuel surcharges remain a variable factor influenced by market prices. The company's ability to manage these fluctuating costs is key to protecting its operating margins, as highlighted by analysis on the impact of crude oil prices on companies like US Foods reported by Benzinga.
Financial Health and Valuation Metrics#
A review of US Foods' balance sheet reveals a company with significant scale and assets, but also a notable level of debt. As of December 28, 2024, total assets stood at $13.44 billion, with total liabilities at $8.91 billion and total stockholders' equity at $4.53 billion. Total debt was $5.43 billion, and net debt was $5.38 billion. This represents an increase in debt compared to the end of 2023, when total debt was $5.2 billion and net debt was $4.93 billion, according to Monexa AI balance sheet data.
The company's debt-to-equity ratio stands at approximately 1.04x (or 104.09%), while the net debt-to-EBITDA ratio is approximately 3.48x. These metrics indicate a moderately leveraged balance sheet. While a debt-to-EBITDA ratio of around 3.5x is not uncommon for companies in capital-intensive distribution sectors, it does highlight the importance of consistent earnings and cash flow generation to service this debt. The current ratio, a measure of short-term liquidity, was 1.17x at the end of 2024, suggesting adequate capacity to cover near-term obligations.
From a profitability standpoint, the return on invested capital (ROIC) was approximately 8.54% on a trailing twelve months (TTM) basis, and return on equity (ROE) was approximately 11.24%. These figures provide insight into how effectively the company is using its capital to generate returns for investors, according to Monexa AI TTM metrics. The ROIC of 8.54% suggests that the company is generating returns above its likely cost of capital, which is generally viewed positively.
Valuation multiples for US Foods reflect a market that is pricing in expected future growth. The trailing twelve months Price-to-Earnings (P/E) ratio is approximately 33.31x, and the Enterprise Value to EBITDA (EV/EBITDA) ratio is approximately 16.51x. Looking ahead, analyst estimates suggest a significant decrease in the forward P/E ratio, dropping to 18.9x for 2025 and further to 16.37x for 2026. Forward EV/EBITDA is estimated at 19.12x for 2025 and 18.03x for 2026, according to Monexa AI valuation data. This anticipated compression in forward multiples suggests that the market expects earnings growth to outpace the current stock price relative to those future earnings periods.
Here is a summary of key TTM and Forward Valuation metrics:
| Metric | TTM Value | 2025 Est. | 2026 Est. | Source |
|---|---|---|---|---|
| P/E Ratio | 33.31x | 18.9x | 16.37x | Monexa AI |
| EV/EBITDA Ratio | 16.51x | 19.12x | 18.03x | Monexa AI |
| Price to Sales Ratio | 0.46x | N/A | N/A | Monexa AI |
| Price to Book Ratio | 3.8x | N/A | N/A | Monexa AI |
| Net Debt/EBITDA Ratio | 3.48x | N/A | N/A | Monexa AI |
Note: Forward estimates are based on analyst consensus data provided via Monexa AI.
Analyst consensus estimates point to continued revenue and EPS growth in the coming years. Revenue is estimated to grow at a CAGR of +5.25%, and EPS is expected to grow at a CAGR of +16.99% through 2028, according to Seeking Alpha analyst consensus data. For fiscal year 2025, analysts estimate average revenue of $39.77 billion and average EPS of $3.81. These projections suggest that the market anticipates US Foods will successfully execute on its growth strategies and improve profitability, thereby justifying the current valuation multiples relative to future earnings potential.
Competitive Landscape and Strategic Positioning#
US Foods operates in a highly competitive foodservice distribution market, with major players like Sysco Corporation (SYY) and a multitude of regional and local distributors. The company's strategy involves leveraging its scale, broad product portfolio, and distribution network to serve a diversified customer base, including independent restaurants, healthcare facilities, schools, and hospitality businesses. The strong demand noted from healthcare and independent restaurants in 2025 provides specific avenues for growth within this competitive environment.
Differentiation is key in this sector, and US Foods' emphasis on sustainability appears to be a deliberate strategic move to stand out. The $1 billion+ in sustainable product revenue demonstrates that this is not just a marketing initiative but a commercially successful strategy that aligns with evolving customer values. This focus positions US Foods favorably compared to competitors who may be slower to adopt comprehensive environmental and social governance (ESG) practices, potentially attracting customers who prioritize such factors.
Furthermore, investments in logistics and operational technology are crucial for maintaining competitiveness. The adoption of electric vehicles and charging infrastructure, alongside efforts to optimize delivery routes, reflects a commitment to enhancing efficiency and reducing operating costs in the face of volatile fuel prices and labor costs. These operational improvements, if successful, can contribute to margin expansion and strengthen the company's competitive position by improving service levels and cost-effectiveness.
Conclusion and Investor Considerations#
US Foods' recent performance reveals a company that is successfully growing its top line and improving operational profitability, albeit with some pressure points impacting net income and occasional earnings misses relative to analyst consensus. The slight dip in net income in FY 2024 and the Q1 2025 EPS miss highlight the challenges of managing costs in a dynamic environment, particularly with rising fuel prices.
The company's strategic investments in sustainability and logistics are noteworthy and appear to be yielding tangible results, such as the significant revenue generated from sustainable product lines. These initiatives are not only important from an ESG perspective but also serve as potential differentiators and drivers of long-term value creation in a competitive industry. The strong demand from specific sectors like healthcare and independent restaurants also provides a favorable backdrop for continued growth.
However, the company's leverage, with a net debt-to-EBITDA ratio of 3.48x, remains a key factor for investors to monitor. While currently manageable with existing cash flow, this level of debt could become more challenging if the macroeconomic environment deteriorates significantly or if sector-specific growth slows. The market's forward valuation multiples suggest an expectation of future earnings improvement, which would help to reduce the leverage ratios over time, assuming estimates are met.
Investors evaluating US Foods should consider the balance between the company's demonstrated ability to grow revenue and improve operational efficiency against the risks associated with high leverage and external cost pressures. The commitment to sustainability and operational optimization suggests a forward-looking management approach focused on long-term resilience and competitive advantage. Continued monitoring of earnings reports, debt management strategies, and trends in key customer segments will be crucial for assessing the company's trajectory. The next earnings announcement is scheduled for August 6, 2025, which will provide updated insights into the company's performance and outlook.