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Why Roundy's, Inc. Shares Spilled Today

By Brian D. Pacampara, CFA - Feb 27, 2014 at 12:03PM

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Is this meaningful or just another movement?

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 embattled grocery store chain Roundy's (NYSE: RNDY) sank 10% today after its quarterly results and outlook disappointed Wall Street.

So what: The stock has plummeted in recent months on skepticism over a turnaround, and today's Q4 results -- earnings of $8.7 million on a revenue increase of just 2% -- coupled with downbeat guidance only reinforces those negative vibes. While the Roundy's managed to reverse its year-ago loss of $98.4 million, same-store sales during the quarter declined 2.4%, suggesting that its competitive position continues to weaken.

Now what: Management now sees full-year 2014 EPS of $0.27-$0.40, well below Wall Street's view of $0.74. "While we still have important challenges to overcome in our core markets, we believe the investments we made in 2013 and continue to make in 2014 are beginning to resonate with our customers," chairman, president, and CEO Robert Mariano reassured investors. Given Roundy's worrisome operating trends and still-hefty debt load, however, I wouldn't be so quick to buy into that bullishness. 

Brian Pacampara has no position in any stocks mentioned, and neither does The Motley Fool. 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.

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