Supervalu is among the cheapest stocks in its peer group
In this part of our series, we’ll look at Supervalu’s (SVU) current valuations and Wall Street’s recommendations on the stock.
Supervalu is currently trading at a one-year earnings multiple of 7.5x, operating in the middle of its 52-week price-to-earnings range of 5.3x to 9.7x.
The company trades at a discount to supermarket peers. In comparison, Kroger (KR), Sprouts Farmers Market (SFM), and Whole Foods Market (WFM) are trading at 14.4x, 23.6x, and 19.2x their next-12-months earnings.
Wall Street’s view on SVU
Supervalu is covered by 11 Wall Street analysts, who have jointly rated the stock a 2.7 on a scale of 1 (strong buy) to 5 (sell). In comparison, Whole Foods, Sprouts, and Kroger are rated 3.1, 2.2, and 2.2, respectively.
27% of analysts have recommended a “buy” on the stock and 73% have recommended a “hold.” There’s no sell recommendation on the stock. There have been no rating changes following the company’s yesterday’s results release.
SVU has been assigned an average target price of $6.19, implying that analysts see the stock price rising ~33% over the next 12 months. Individual target prices on the stock range between $5 and $10.
Supervalu has the best return potential over the next year among supermarket peers, as per Wall Street’s assigned target prices. Stock prices of Kroger, Whole Foods, and Sprouts Farmers are expected to increase 17%,7%, and 15%, respectively, over the next 12 months.
ETF investors seeking to add exposure to SVU can consider the iShares Morningstar Small-Cap Value ETF (JKL), which invests 0.26% of its portfolio in the company.