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SuperValu Cruises past Analyst Expectations, Still Sinks

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SuperValu Cruises past Analyst Expectations, Still Sinks PART 1 OF 5

Introducing SuperValu’s Fiscal 2Q18 SuperValu Results: Earnings, Revenue Beats

Snapshot

Minnesota-based SuperValu (SVU) reported results for fiscal 2Q18 (ended September 9, 2017) on Tuesday, October 18, 2017. SVU reported adjusted EPS (earnings per share) of $0.46, beating the consensus by $0.10. Total sales from continuing operations stood at $3.8 billion, which was 35% higher YoY (year-over-year), topping the Wall Street estimate by $10.0 million.

Introducing SuperValu&#8217;s Fiscal 2Q18 SuperValu Results: Earnings, Revenue Beats

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The company also announced the acquisition of Associated Grocers of Florida. But despite the earnings beat, Supervalu’s stock lost 19% in the next two trading sessions.

Valuations summary

SuperValu hit the lower end of its 52-week PE (price-to-earnings ratio) range after its fiscal 2Q18 results. The company is currently trading at a one-year forward earnings multiple of 6x, compared with its three -year average of 9x. By comparison, supermarket peers Kroger (KR) and Sprouts Farmers Market (SFM) are trading at PE multiples of 10.6x and 19.4x, respectively, while wholesalers United Natural Foods (UNFI) and Sysco (SYY) are trading at 14.9 and 19.8x, respectively.

ETF investors seeking to add exposure to SVU can consider the SPDR S&P Retail ETF (XRT), which invests 1.2% of its portfolio in the company.

About SuperValu

Supervalu is one of America’s largest grocery wholesalers and retailers, with annual sales of ~$13.7 billion. The company derives revenues through two businesses: Wholesale Distribution and Logistics Services and Food Retail Stores (which includes Farm Fresh and Cub Foods).

In this series, we’ll take an overview of Supervalu’s fiscal 2Q18 results, discussing financial performance, stock market performance, and Wall Street’s recommendations.

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