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With US Foods Holding Corp. (NYSE:USFD) It Looks Like You'll Get What You Pay For

Simply Wall St·07/16/2025 12:01:13
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With a price-to-earnings (or "P/E") ratio of 35.6x US Foods Holding Corp. (NYSE:USFD) may be sending very bearish signals at the moment, given that almost half of all companies in the United States have P/E ratios under 18x and even P/E's lower than 11x are not unusual. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so lofty.

There hasn't been much to differentiate US Foods Holding's and the market's earnings growth lately. It might be that many expect the mediocre earnings performance to strengthen positively, which has kept the P/E from falling. If not, then existing shareholders may be a little nervous about the viability of the share price.

Check out our latest analysis for US Foods Holding

pe-multiple-vs-industry
NYSE:USFD Price to Earnings Ratio vs Industry July 16th 2025
Keen to find out how analysts think US Foods Holding's future stacks up against the industry? In that case, our free report is a great place to start.

How Is US Foods Holding's Growth Trending?

In order to justify its P/E ratio, US Foods Holding would need to produce outstanding growth well in excess of the market.

Taking a look back first, we see that the company managed to grow earnings per share by a handy 6.9% last year. This was backed up an excellent period prior to see EPS up by 252% in total over the last three years. So we can start by confirming that the company has done a great job of growing earnings over that time.

Turning to the outlook, the next three years should generate growth of 25% per year as estimated by the analysts watching the company. That's shaping up to be materially higher than the 11% per annum growth forecast for the broader market.

With this information, we can see why US Foods Holding is trading at such a high P/E compared to the market. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Key Takeaway

Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

As we suspected, our examination of US Foods Holding's analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E. Right now shareholders are comfortable with the P/E as they are quite confident future earnings aren't under threat. Unless these conditions change, they will continue to provide strong support to the share price.

And what about other risks? Every company has them, and we've spotted 1 warning sign for US Foods Holding you should know about.

Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on a low P/E.