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What: Shares of embattled grocery store operator SUPERVALU
So what: SUPERVALU's fourth-quarter profit beat -- adjusted EPS of $0.38 versus the average analyst estimate of $0.35 -- is forcing investors to cautiously raise their valuation estimates. Persistent market share losses have crushed the stock in recent months, but today's results suggest that management's "business transformation" initiatives -- store closures, asset sales, downsizing, etc. -- are starting to take hold.
Now what: Looking ahead, management sees 2013 EPS of $1.27-$1.42, also well above the consensus of $1.19. "As we move into fiscal 2013, we see another year of improving identical store sales and will continue to take appropriate steps to deliver greater value to our customers and move closer to becoming America's Neighborhood Grocer," CEO Craig Herkert said. With the stock still down about 30% year to date and trading at a forward P/E of five, there might even be room to buy into that optimism.
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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of SUPERVALU. Motley Fool newsletter services have recommended buying calls on SUPERVALU. Try any of our Foolish newsletter services free for 30 days.