By Brad Lamensdorf of Ranger Equity Bear and Eric Fernandez, CFA of Two Rivers Analytics, Inc.
United Natural Foods (NASDAQ:UNFI) is full of artificial valuation fillers. It also has unwholesome negative cash flows and a growth story that is turning sour. Sparing readers more food puns for now, UNFI stock should be sold short. The key organic food incumbent and UNFI's largest customer (Whole Foods (NASDAQ:WFM)) is facing new competition from several directions, crimping UNFI's growth and margins. UFNI appears unable to turn sales growth into cash flow and is currently showing negative and declining cash flows. The balance sheet is worsening from continued inventory investment, and the stock is overvalued relative to its growth prospects.
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