For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.
So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like US Foods Holding (NYSE:USFD). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide US Foods Holding with the means to add long-term value to shareholders.
The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That means EPS growth is considered a real positive by most successful long-term investors. To the delight of shareholders, US Foods Holding has achieved impressive annual EPS growth of 52%, compound, over the last three years. That sort of growth rarely ever lasts long, but it is well worth paying attention to when it happens. Getting in to the the finer details, it important to know that the EPS growth has been helped by share buybacks, demonstrating that the business is positioned to return capital to its shareholders.
One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. US Foods Holding maintained stable EBIT margins over the last year, all while growing revenue 6.3% to US$38b. That's encouraging news for the company!
In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.
NYSE:USFD Earnings and Revenue History May 30th 2025
Are US Foods Holding Insiders Aligned With All Shareholders?
Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, small purchases are not always indicative of conviction, and insiders don't always get it right.
First things first, there weren't any reports of insiders selling shares in US Foods Holding in the last 12 months. But the important part is that Independent Director David Bullock spent US$284k buying stock, at an average price of US$71.06. Purchases like this can offer an insight into the faith of the company's management - and it seems to be all positive.
Along with the insider buying, another encouraging sign for US Foods Holding is that insiders, as a group, have a considerable shareholding. Given insiders own a significant chunk of shares, currently valued at US$87m, they have plenty of motivation to push the business to succeed. That's certainly enough to let shareholders know that management will be very focussed on long term growth.
While insiders are apparently happy to hold and accumulate shares, that is just part of the big picture. That's because US Foods Holding's CEO, Dave Flitman, is paid at a relatively modest level when compared to other CEOs for companies of this size. For companies with market capitalisations over US$8.0b, like US Foods Holding, the median CEO pay is around US$14m.
US Foods Holding's CEO took home a total compensation package worth US$11m in the year leading up to December 2024. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.
Is US Foods Holding Worth Keeping An Eye On?
US Foods Holding's earnings per share have been soaring, with growth rates sky high. To sweeten the deal, insiders have significant skin in the game with one even acquiring more. These factors seem to indicate the company's potential and that it has reached an inflection point. We'd suggest US Foods Holding belongs near the top of your watchlist. What about risks? Every company has them, and we've spotted 1 warning sign for US Foods Holding you should know about.
Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
