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Discussing SUPERVALU’s Slide

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Jul. 17 2017, Updated 7:40 a.m. ET

SUPERVALU’s stock market performance

SUPERVALU (SVU) stock fell 50% between 2015 and 2016, and its share price continues to be in the red in 2017. 

The company has fallen ~30% year-to-date (or YTD), and it’s trading 73% below its 52-week high.

In comparison, organic and natural food retailers Whole Foods Market (WFM) and Sprouts Farmers Market (SFM) have risen 36% and 24%, respectively, YTD. Whole Foods stock gained momentum after the announcement of Amazon’s acquisition of it on June 16, 2017. The organic retailer has risen 27% since then.

The announcement negatively impacted SUPERVALU and several other retail players. SVU fell 14%, and Kroger tumbled 9% after the news of the deal broke on June 16.

SUPERVALU has underperformed the S&P 500 Index (SPX), which has risen 8.3% YTD. In comparison, the S&P 500 Food & Staples Retail Index has fallen 2.8% YTD.

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Valuations

SUPERVALU continues to trade at a discount to most wholesalers and retailers in its peer group. The company is trading at a one-year forward price-to-earnings ratio (or PE) of 9x. Kroger, in comparison, is trading at a PE of 11.3x, while Whole Foods is trading at a PE of 31.8x. Wholesalers United Natural Foods (UNFI) and Sysco (SYY) are also trading at premiums to SUPERVALU at PEs of 13.6x and 18.8x, respectively.

ETF investors seeking to add exposure to SVU can consider the WisdomTree SmallCap Earnings ETF (EES), which invests 0.4% of its portfolio in the company.

Read about Wall Street’s recommendations for SVU in the next article.

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