Is there a tougher business than food?

Restaurants go belly-up all the time, supermarkets deal with razor-thin margins and competition from Wal-Mart (NYSE:WMT) and Target (NYSE:TGT), and even one of the best-run distributors in the game (Sysco (NYSE:SYY)) can't get its operating margins much above 5%.

So with that in mind, I can't help but wonder whether SuperValu (NYSE:SVU) is either "super" or a "value" these days. Third-quarter results wouldn't immediately suggest an affirmation of either. Total revenue rose 2%, comp-store retail sales were negative, and margins were pretty much stuck. What's more, even when you add back all of the items that depressed earnings per share, you're still left with a negative year-over-year comparison.

In the retail food business, total sales were flat and comp-store sales dropped 1.6%. The company blamed high energy prices, but I find that dubious. In the grand scale of personal expenditures, I've got to think that cutting back on "value" groceries is about the last line that people cross. In any case, operating profits were lower even when you add back the costs of Katrina-related expenses and of selling 20 stores in Pittsburgh.

Turning to the distribution and logistics business, sales grew about 3% but margins worsened. Management would apparently like you to exclude the impact of expenses related to technology investments and new initiatives, but I don't see why I should. Keeping yourself competitive for the future is part of the expenses that every company incurs today. In any event, operating earnings were down versus last year.

From a valuation perspective, I don't see a huge bargain here. A P/E of about 14 exceeds not only the company's growth rate over the past decade but also analyst expectations for the future. So, too, when looking at structural free cash flow in terms of past growth and relative to current enterprise value. Now, I'll concede that the company has plans for growth and plans to change the business in ways that may improve growth and/or margins. But why should I pay a premium to get into a brutally tough industry when players like Albertsons (NYSE:ABS) want out?

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).