Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of SUPERVALU Inc. Popped 16% Today

By Travis Hoium - Updated Apr 25, 2017 at 2:35PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A better-than-expected earnings report pushed this grocer's shares higher on Tuesday.

What happened

Shares of grocery company SUPERVALU Inc. (SVU) jumped as much as 16.1% in trading Tuesday after reporting earnings for the fiscal fourth quarter. As of 12:40 p.m. EDT shares had lost most of their gains but were still up 6.4% on the day.

So what

Revenue rose slightly to $2.91 billion and wholesale revenue rose 3%, but same store sales in retail fell 5.8% in the quarter. Earnings from continuing operations did come in at $6 million, or $0.02, and adjusted for a one-time loss earnings would have been $38 million, or $0.13 per share.

A bag of groceries on its side.

Image source: Getty Images.

Analyst estimates were for $0.09 per share, so earnings were much better than expected. And now that the Save-A-Lot sale has gone through, expectations will keep going up with analysts expecting $0.13 per share in earnings during the first fiscal quarter of 2018.

Now what

This is kind of a dead cat bounce for SUPERVALU, which hasn't been able to gain any real traction in growing either the wholesale or retail business. The Save-A-Lot sale was intended to improve the balance sheet, but it doesn't discount the fact that the rest of the business is barely profitable and doesn't have a clear way to grow in the future. I'd be leery of reading into Tuesday's bounce too much and would wait to see growth before jumping into this stock. And that may be a lot to ask for SUPERVALU in today's competitive grocery environment.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

SUPERVALU Inc. Stock Quote
SUPERVALU Inc.
SVU

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
334%
 
S&P 500 Returns
117%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.