Why Delhaize Shares Popped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Brussels-based supermarket operator Delhaize Group (NYSE: DEG  ) climbed 10% today after its preliminary quarterly results and outlook topped Wall Street expectations.

So what: Delhaize sales were hit pretty hard during the downturn, but today's first-quarter beat -- profit of 214 million euros versus the consensus of 175 million euros -- coupled with upbeat full-year guidance suggests that management's restructuring plan continues to gain traction. Of course, favorable weather conditions helped fuel the 1.9% same-store sales increase in the U.S., so Fools should be cautious about getting too excited over the report.

Now what: For 2013, management now sees a year-over-year profit decline of just 4.3%. "As a consequence of our continued focus on our strategic priorities, Delhaize Group expects underlying operating profit of approximately EUR775 million for the full year 2013 at identical exchange rates," the company said in a statement. Of course, when you combine Delhaize's still-hefty debt load with its red-hot stock price, I'd wait for a wider margin of safety before buying into that bullishness.

Interested in more info Delhaize? Add it to your watchlist.

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7/25/2016 4:05 PM
DEG $0.00 Down +0.00 +0.00%
Delhaize Group CAPS Rating: *