US Foods Reports Solid Q2 Results; Shares Look Compelling, Trading 20% Below Our Valuation

After no-moat US Foods’ second-quarter results, we don’t plan a material change to our $41.50 fair value estimate, as stronger sales are offset by our view that U.S. food-service industry volumes will soften in the next year. While US Foods, like narrow-moat Sysco, is not yet seeing signs of weaker demand, we think this will materialize, as consumers conserve budgets by eating at restaurants less often.