Why Shares of SUPERVALU Inc. Jumped

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 SUPERVALU Inc.  (NYSE: SVU  ) were heading to the top shelf today, gaining as much 15% and finishing up 12% after besting expectations in its quarterly earnings report. 

So what: The supermarket chain posted a per-share profit of $0.18, ahead of estimates at $0.15, while revenue inched up 1.5% to $3.95 billion, topping the consensus at $3.88 billion. Same-store sales at its Save-A-Lot locations improved 2.1%, while comps its other locations were close to flat. The quarter seems to be evidence that efforts to streamline the company have paid off after it sold several grocery banners last year, including Albertson's and Shaw's, and CEO Sam Duncan said, "We stabilized the organization and set the foundation for the future."

Now what: After jumping out of the gate this morning, shares fell back during the earnings call when management said EBITDA in the current fiscal year would be less than last year as the company invests in price and build the business. Analysts had been expecting EPS growth of 18% in the current year, which may have caused the sell-off but over the remainder of the trading day the stock recovered as investing for the long term looks like a smart move. Still, the supermarket industry is always competitive, with big boxes like Wal-Mart expanding their offerings, and changes are afoot with organic products taking share from conventional ones. Keep an eye on same-store sales in future quarters as a reflection that the company is still headed in the right direction.

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