SUPERVALU (NYSE:SVU) will release its quarterly report on Thursday, and investors have been increasingly optimistic that its massive restructuring is having the results they'd hoped to see. With SUPERVALU earnings expected to be positive for the second quarter in a row, the stock has hit its best levels in almost two years.

SUPERVALU is a much different company than it was in late 2011, as it sold off some of its best-known store chains to Cerberus Capital in order to help the rest of its operations survive. The loss of Albertson's, Jewel-Osco, and other brands has left SUPERVALU smaller but also better-positioned to fight off rivals Kroger (NYSE:KR) and Safeway (NYSE:SWY). Yet Kroger's proposed acquisition of Harris Teeter will make it an even bigger force in the industry, and Safeway has attracted the interest of activist investors looking to maximize shareholder value. How will SUPERVALU respond? Let's take an early look at what's been happening with SUPERVALU over the past quarter and what we're likely to see in its report.


Analyst EPS Estimate


Year-Ago EPS


Revenue Estimate

$3.88 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can SUPERVALU earnings keep growing this quarter?
Analysts have gotten a lot more optimistic about SUPERVALU earnings in recent months, more than doubling their August-quarter estimates and boosting full year fiscal 2014 projections by more than 70%. The stock has continued its impressive run higher, rising another 20% since mid-July.

SUPERVALU's results from its May quarter boosted investor enthusiasm despite including some troubling numbers. Even allowing for discontinued operations, revenue fell 1.5%, with same-store sales drops of 3% for its retail-food segment and 1.9% for its Save-A-Lot stores. Cost-cutting measures cushioned the blow, but a $105 million net loss from continuing operations shows just how much more work SUPERVALU has to do in order to complete its turnaround.

One area where SUPERVALU has lagged its competitors is in the key sales-per-square-foot metric. The company has done a good job increasing sales gradually over time, but Kroger and Safeway both retain a big advantage over SUPERVALU. Weak margins have been problematic, and SUPERVALU has struggled to work on getting its same-store sales back into positive territory.

Yet SUPERVALU doesn't have the luxury of expecting its competitors to sit still. Safeway hopes that proceeds from the sale of its Canadian grocery chain will help it improve its balance sheet and put it in better position to make capital expenditures to compete more effectively. Kroger, meanwhile, expects its $2.4 billion buyout of Harris Teeter to bolster its presence in the Southeast and could make further acquisitions to fill out its nationwide footprint.

In the SUPERVALU earnings report, watch to see whether the company's revenue figures start to reflect improvement. Even if earnings improve, SUPERVALU needs to see the fundamentals of its business get back to normal in order to declare victory in its restructuring efforts.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.