Why Supervalu’s Shares Tumbled on 1Q17 Earnings Miss



Stock falls 12.5% on poor fiscal 1Q17 results

As we’ve already seen, Supervalu (SVU) reported its results for fiscal 1Q17 on Wednesday, July 27, 2016. The company missed Wall Street’s average earnings estimate by $0.03 and reported EPS (earnings per share) of $0.19.

As a result, SVU shares fell ~12.5% to close at $4.62 on July 27. This brings the company’s YTD (year-to-date) loss to 32% as of July 28, 2016. SVU is now trading ~50% below its 52-week high price of $9.37.

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Comparing SVU’s performance to its peers

Supervalu is the worst-performing supermarket player in the Market this year. While all the other major players have reported losses this year, Supervalu’s losses are the greatest.

Kroger (KR), which had risen more than 30% in 2015, has fallen 16.4% YTD. Natural and organic food player Whole Foods Market (WFM), which also reported its results on July 27, 2016, saw its gains erasing on poor earnings. The company is now trading at an 8% YTD loss. Sprouts Farmers Market (SFM), which has consistently posted healthy earnings, is sitting at YTD losses of 13%.

The supermarket segment has underperformed the S&P 500 Food & Staples Retail Index, which has risen 3.2% to date.

Supervalu doesn’t pay dividends

Supervalu currently doesn’t pay any dividends. In comparison, Kroger and Whole Foods Market have been consistent dividend payers. The two companies have dividend payout ratios of 19.5% and 34.8%, respectively.

ETF investors seeking to add exposure to SVU can consider the iShares Morningstar Small-Cap Value ETF (JKL), which invests 0.32% of its portfolio in the company.

In the next and final part of our series, we’ll look at the company’s earnings forecasts and valuations compared to its peers.


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