US FOODS HOLDING CORP. (USFD): what the price assumes

In the published model solve dated 2026-Q2, anchored at $107.27, US FOODS HOLDING CORP. (USFD) is priced for +19.4% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-28.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/USFD

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.1% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.8%); the inversion above states its own rate.

Per-Model Detail (n=18)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• US Foods is one of the country's largest broadline foodservice distributors, and its growth engine is the highest-margin slice of that business: independent restaurants, where case volume rose 4.6% in Q1 2026, the 20th straight quarter of share gains.
• The model is thin-margin and scale-driven: it earns about 3% operating margin on roughly $40 billion of revenue, with adjusted EBITDA growing 6.2% to $413 million in Q1 2026 despite weather and fuel headwinds.
• The main risk is demand and cost: restaurant traffic and food inflation drive the volumes, and the company warns it may fail to increase or maintain the highest margin portions of our business, including sales to independent restaurant customers.

Bull Case

Read US Foods as what it is, a mature broadline distributor, and the numbers make sense in a way they would not for a growth company. A mature distributor's value is in scale economics and mix, not in revenue fireworks. The business earns a thin operating margin near 3% on roughly $40 billion of revenue, which sounds unremarkable until you realize that on a base that large, small improvements in mix and efficiency translate into meaningful profit. That is exactly what is happening: Q1 2026 adjusted EBITDA grew 6.2% to $413 million with the margin expanding 14 basis points to 4.3%, even though weather and fuel headwinds shaved about four percentage points off the growth. A distributor widening its margin against headwinds is improving the quality of its earnings, not just the quantity.

The engine behind the margin is the customer mix, and it is the right one. US Foods is winning the most profitable customers: independent restaurant case volume rose 4.6% in the quarter, marking the 20th consecutive quarter of independent-restaurant share gains, with health care and hospitality also growing. Independent restaurants and the company's private-label products are the highest-margin parts of the business, and the company is explicit that maintaining that mix matters to its results. A distributor that consistently takes share in its most profitable segment is compounding margin, not just volume, which is the durable form of growth for a scale business.

The forward setup is concrete. Management reaffirmed full-year fiscal 2026 guidance of net sales growth of 4% to 6%, adjusted EBITDA growth of 9% to 13%, and adjusted diluted EPS growth of 18% to 24%, with the EPS growth amplified by operating leverage and a shrinking effective share count. The valuation is not demanding for that trajectory: the price sits roughly in line with where the relative-multiple methods land, and the EBITDA growth guidance well outpaces the revenue guidance, which is the signature of a business converting scale into profit. The bull case is a mature distributor with a winning customer mix, expanding margins, and an EPS growth rate that the thin headline margin disguises.

Bear Case

The external variable with the most leverage on US Foods is the health of the restaurant economy, and it is the one the company cannot control. Foodservice distribution is a derivative of restaurant traffic: when consumers eat out less, case volumes soften across the board, and total case growth was already a modest 1.4% in Q1 2026, with the headline growth held back by weather and fuel. Food inflation is the second macro lever. Distributors pass through cost increases, but rapid inflation pressures restaurant customers, who then cut menu items or trade down, and deflation compresses the dollar value of the same volume. The company cautions that in periods of economic uncertainty or significant inflation competitors with lower cost to serve and local presence can gain an edge. The thesis rests on restaurant demand staying healthy and inflation staying manageable, neither of which is in management's hands.

The mix that powers the bull case is also a dependency that can reverse. US Foods is explicit that it may fail to increase or maintain the highest margin portions of our business, including sales to independent restaurant customers and sales of our private label products. Independent restaurants are the most profitable customers but also the most fragile in a downturn, since small operators have less cushion than national chains. If a recession thins the ranks of independent restaurants, US Foods loses its highest-margin volume precisely when it needs it most, and the margin expansion the price is paying for reverses.

The balance sheet adds the amplifier. US Foods carries net debt of about $5.1 billion, roughly four times operating income, with interest coverage near 3.9 times. That leverage is workable in a steady demand environment, but it is fixed, and it sits ahead of the equity if volumes and margins soften together. The valuation gives little discount for that combination: the asset and earnings-power methods land far below the price, with normalized earnings power near $20, because there is thin current earning power to capitalize on a 3% margin; only the relative-multiple and growth methods reach the price. The peer set, the other large foodservice and grocery distributors, all live with the same thin margins and demand sensitivity. The bear is not that US Foods is failing; it is taking share and expanding margin. It is that a leveraged, thin-margin distributor priced for continued mix-driven margin growth is exposed to a restaurant-demand cycle and a food-inflation backdrop it does not control.

Valuation

The price is making a margin-and-mix bet, which is the right way to read a thin-margin distributor. Inverting today's price near $92 (June 28, 2026) implies operating growth that looks high in percentage terms, around 20%, but on an operating margin near 2%, below the 3% the company earns today. The large implied growth rate is an artifact of the thin margin base: when current operating profit is small relative to the enterprise, even modest dollar gains read as large percentage growth. The honest framing is that the price assumes the EBITDA-margin expansion and the independent-restaurant share gains continue, not that the business needs a dramatic acceleration.

The methods sort along the thin-margin line. The asset-based methods land far below the price, with the simple excess-return method near $33 against a book value of $19.43 a share, and the earnings-power methods land lower still, near $20, because a 3% operating margin produces little earnings power to capitalize without growth. The relative-multiple methods land near the price, with the EV/EBITDA-relative approach near $82 and the sector price-to-earnings method near $76. The forward-growth methods land near $62 to $78. So the price is defended by peer multiples and the growth methods, and called expensive by the methods anchored to today's thin earnings. For a scale distributor whose value is in mix and operating leverage rather than current margin, that pattern is expected, and the EBITDA-relative method near the price is the most relevant lens.

Solvency is the load-bearing block to close on. Net debt of about $5.1 billion is roughly four times operating income with interest coverage near 3.9 times, a level that is manageable while volumes and margins grow but that bounds the downside if they soften together. The balance sheet is the amplifier on a thin-margin model. The peer comparison runs to the other broadline distributors like Sysco and Performance Food Group, and the grocery distributors like UNFI, Albertsons, and Kroger, where the relevant question is mix and margin trajectory, not relative multiple level. US Foods' edge in that comparison is its consistent independent-restaurant share gains. What the buyer is underwriting at this price is continued mix-driven margin expansion and EBITDA growth, on a leveraged balance sheet exposed to the restaurant-demand and food-inflation cycle.

Catalysts

The Q1 2026 report was the catalyst, and it showed margin progress against macro headwinds. Net sales reached about $9.6 billion and adjusted EBITDA grew 6.2% to $413 million, with the margin expanding 14 basis points to 4.3%, though weather and fuel reduced the growth by roughly four percentage points. Total case volume grew 1.4%, or 1.6% excluding a divestiture, but the higher-margin segments outperformed: independent restaurant volume rose 4.6%, the 20th consecutive quarter of share gains, with hospitality up 5% and health care up 3.7%.

Management reaffirmed full-year fiscal 2026 guidance of net sales growth of 4% to 6%, adjusted EBITDA growth of 9% to 13%, and adjusted diluted EPS growth of 18% to 24%, noting that the guidance includes the benefit of a 53rd week expected to add about 1% to total case and EBITDA growth. The wide gap between the EBITDA and EPS growth rates reflects operating leverage and capital return amplifying the bottom line.

The catalysts to watch are the quarterly independent-restaurant case-volume trend, the single cleanest signal of whether the high-margin share gains are holding, and the adjusted-EBITDA-margin trajectory, which shows whether the mix and efficiency gains are outrunning cost pressures. The broader restaurant-demand and food-inflation backdrop is the macro variable that most directly determines whether the volume and margin targets are achievable.

Peer Cohorts (Per Segment, With Filing Citations)

US Foods (single operating segment - foodservice distribution) (reported)

• SYY (Sysco Corporation)
• FY2025 10-K: …Exchange Commission on August 28, 2024. Overview Sysco distributes food and related products to restaurants, healthcare and educational facilities, lodging establishments and other foodservice customers. Our primary operations are in North America and Europe. Under the accounting provisions related to disclosures…
• FY2025 10-K: …information is attributable to our other operations that do not meet the quantitative disclosure thresholds. • U.S. Foodservice Operations - primarily includes (a) our U.S. Broadline operations, which distribute a full line of food products, including custom-cut meat, seafood, produce, specialty Italian, specialty…
• PFGC (Performance Food Group Company)
• FY2025 10-K: …costs previously reported in Corporate & All Other are now included in the Foodservice segment. In the third quarter of fiscal 2025, the Company also renamed the segment formerly known as "Vistar," which, going forward, has been referred to as "Specialty." There were no changes to the operations reported within the…
• FY2025 10-K: 024, which remains materially consistent with the recast prior period results disclosed herein reflecting the updates made to our reportable segments in the third quarter of fiscal 2025 discussed below. Our Company We market and distribute over 250,000 food and food-related products to customers across the United…
• UNFI (UNITED NATURAL FOODS, INC.)
• FY2025 10-K: …with UNFI customers. Through this virtual marketplace, suppliers gain expedited access to UNFI's digital infrastructure to promote and sell their products to UNFI's broad customer base while UNFI customers gain access to an even broader assortment of unique and local items with flexible order sizes and the…
• FY2025 10-K: …seeds, trail mixes, granola, natural and organic snack items and confections for our customers and in the Company's branded products. We operate an organic (United States Department of Agriculture ("USDA") and Quality Assurance International ("QAI")) and kosher (Circle K) certified packaging, roasting, and processing…
• KR (KROGER CO)
• FY2025 10-K: $ 1,228 in 2024, $ 1,182 in 2023 and $ 1,129 in 2022. ​ 16. SEGMENT REPORTING ​ The Company operates supermarkets, multi-department stores and fulfillment centers throughout the United States. The Company's retail operations, which represent 98 % of the Company's consolidated sales, are its only reportable segment.…
• FY2025 10-K: 2,800 owned or leased supermarkets, distribution warehouses, customer fulfillment centers and food production plants through divisions, subsidiaries or affiliates. These facilities are located throughout the United States. We generally own store equipment, fixtures and leasehold improvements, as well as processing and…
• SFM (Sprouts Farmers Market, Inc.)
• FY2025 10-K: …pass on to our customers. Distributors and farmers recognize the volume of goods we sell through our stores and our flexible purchasing and supply chain model allows us to opportunistically acquire produce at great value. As a step to improve our fresh supply chain, in 2025 we began the transition to a…
• FY2025 10-K: …product offerings, so our team members can continue to engage and assist our customers. We also support leadership and career opportunities for our team members at Sprouts. We believe our team members contribute to our consistently high service standards and this helps us successfully open and operate our stores. Our…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.