PreMarket Prep Stock Of The Day: United Natural Foods

While price action in the board market can be a catalyst for an issue, the most important one is a company's earnings report. United Natural Foods UNFI announced its fourth-quarter results Monday afternoon and is the PreMarket Prep Stock Of The Day.

The Company: United Natural Foods is a wholesale distributor of natural, organic and specialty foods and nonfood products across North America.

Being a long-term holder of this issue would leave a bad taste in your mouth. Since peaking in March 2015 at $83.91, at its current price of $17, it has shed 80%. From the S&P 500's March 2015 high (2,117.52), at its current price of 3,338, it has added 58%.

Buyers Feast In March: After ending 2019 in single digits at $8.76, it was still out of favor in January while the broad market rallied as it slumped to $7.20 by month's end. It wasn't spared during the market meltdown and ended February at $6.47.

That marked the lowest monthly close for the issue since February 2001, when it ended that month at $6.38. Its March 18 low ($5) came in just above its October 2000 low ($4.78).

People Have To Eat: Since falling into the category of a “stay at home” stock, the issue benefited from the spring lockdowns and began a tasty rally. With market momentum off the March low, it was able to reach $23.38 in mid-May.

The bulk of those gains came in a two-day period (May 12-13), when it rallied on a closing basis from $12.68 to $22.59, a 78% increase.

Gorging On Preliminary Q3 Results, Q4 Guidance: Interestingly, the first leg of the two-day took place ahead of the actual news release. During the May 12 session, it opened flat and rallied all day from its previous day close ($12.68) to $15.51 on much heavier than average volume.

The news release after the close that day propelled the issue to $23.28, before falling back to end the day at $22.59 on nearly five times the volume of previous days' bloated volume.

It should be noted that profit-takers immediately came into the issue on May 13, slimming down its price from $22.59 to $18.08.

Street Not Impressed: After the close on Monday, the company announced an EPS beat of 32 cents along with a slight sales beat. The upcoming fiscal year's EPS is expected to be between $3.05 and $3.55 and fiscal year sales between $27-$27.8 billion.

In anticipation of a better report, the issue rallied on Monday from $17.91 to $19.18. However, sellers are in control in today’s session. After a lower open, it attempted to rally, but came up shy of the lower-end of Monday’s range ($18), only reaching $17.90 and resumed its move lower.

As of 12:30 p.m. ET, it has fallen to $16.38 and is attempting to rebound. That low coincides with two other lows in that area from June 2019 ($16.36) and June 20 ($16.11).