No-Moat US Foods Is Managing Pandemic Challenges Well, Leaving Shares Modestly Undervalued

No-moat US Foods reported second-quarter sales of $7.7 billion, a mid-90% of prepandemic sales (adjusted for acquisitions) by our estimate, besting our expectation for sales that represented a high-80% of the pre-crisis level. By channel, restaurants, healthcare facilities, and hospitality sales were at 105%, 90%, and 60% of 2019 sales, with the latter exiting the quarter at over 70%. Although a recent uptick in the number of COVID-19 cases may slow the pace of the recovery, we now think US Foods’ sales will return to its previous peak by early 2022, from late 2022 previously.