SuperValu (SVU), the left-for-dead grocer that has recently hit 23 year lows on concerns over its margins and high debt burden, gained 6.22% in regular trading and then another 1.15% in after hours. Compare to the S&P 500 which fell 1.12%. Why did this happen? Short squeeze. Even the slightest positive news (in this case, a mention on Mad Money, announcement that it signed a supply deal with another regional chain) can send the shorts rushing for the exits.
The . . .
→ Read More: This grocery stock made a killing in today’s meltdown (SVU)
Morningstar reported the following recommendation about Supervalu ($SVU) on Feb 28:
For value in the grocery store industry, we recommend investors look to Supervalu, trading at 6 times forward earnings, for an investment opportunity in the grocery store space. The firm is facing headwinds from the challenging environment, but we think the market is assuming that the operating environment will never improve.
See the full article here. See my previous write-up here.
Talk to . . .
→ Read More: Morningstar Recommends Supervalu (SVU)
Given Supervalu Inc’s (SVU) earnings miss and lower FY11 guidance, there have been several comparisons with The Great Atlantic-Pacific Tea Co (GAP), which is currently in bankruptcy. Similar to the flawed comparisons being made between Research in Motion (RIMM) and Palm (PALM), I think the grocer comparison distorts the fundamental nature of the two companies. Here is a table showing the cumulative cash flow from operations generated by the two companies for the last four, eight and twelve . . .
→ Read More: On Flawed Comparisons (SVU, GAP)
Friend of the blog and MBA classmate, Saj Karsan of BarelKarsan.com fame published a great article yesterday comparing an investment in Supervalu Inc. (NYSE:SVU) to an investment in an LBO. Given today’s SVU love-fest, here’s an excerpt and a link to the original article in full. Be sure to check out today’s earlier posts on SVU here and here.
The price of the entire Supervalu enterprise (debt + equity) is around $9 . . .
→ Read More: Supervalu: Leveraged Buy-Out For Retail Investors (SVU)
As a quick follow up to this morning’s post on Supervalu, I thought I’d pass along another analysis (a pairs comparison too, which I like). David Sterman of Street Authority posted a nice comparison of Supervalu (SVU) and Whole Foods (WFMI) on Seeking Alpha yesterday.
Even before Supervalu takes steps to improve results, its shares are already stunningly cheap by a variety of investment metrics. For example, it trades for less than six times . . .
→ Read More: Supervalu vs. Whole Foods (SVU, WFMI)