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A Look at Supervalu’s Stock Performance and Valuations

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Apr. 20 2018, Updated 4:50 p.m. ET

Stock price movement of SVU

Supervalu’s (SVU) stock has failed to please investors for quite some time now. After losing about 70% of its value between 2015 and 2017, the stock has already shed more than 30% so far this year. Poor financial performance and growing pessimism for the food retailer after Amazon’s entry into the space have been some of the key reasons behind SVU’s share price decline.

Its stock has been particularly volatile over the last couple of weeks. It was reported on April 6 that the company is exploring the possibility of a potential sale after facing pressure from activist shareholders, including Blackwells Capital LLC. SVU’s share price soared on the news and closed 9.3% higher on April 6.

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However, the stock fell 8.3% after the company said on April 9 that it wasn’t in any serious deal talks. The stock fell another 7% on April 18 as a result of the ongoing mergers and acquisitions speculations and a downgrade from Credit Suisse. See the next part of this series to learn more about recent analyst actions on the company.

How have other food retailers and wholesalers performed this year?

2018 has, so far, been a mixed year for food wholesalers. While United Natural Foods (UNFI) has fallen 8.6% YTD (year-to-date), Sysco (SYY) is sitting at a YTD gain of 2%.

Most food retailers are sitting in the red. Kroger (KR) and Walmart (WMT), for instance, have plunged 10.5% and 11% YTD, respectively.

Valuations

Though SVU had always been one of the cheapest food retailing stocks, the ongoing slide in its share price has pushed the company to trade below its historical valuations.

The company is trading at a one-year-forward price-to-earnings ratio of 5.6x, versus a three-year average of 8.6x. In comparison, United Natural Foods and Sysco trade at 14x and 19x while Kroger and Walmart trade at 12x and 18x, respectively.

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