Spartan Stores, Inc.

Spartan Stores, Inc. ( SPTN - Snapshot Report ) is a regional grocer that recently rewarded shareholders by raising its dividend by 30%. In addition to the rising yield, this Zacks #1 Rank (strong buy) also is a value stock, with a forward P/E of 12.9.

Spartan Stores is a Grand Rapids based grocery distributor to 375 independent grocery stores in Michigan, Indiana and Ohio.

It also operates 97 corporate owned stores in Michigan under the brands Family Fare Supermarkets, Glen's Markets, D&W Fresh Markets and VG's Food and Pharmacy.

Dividend Raised and Share Repurchase Program Announced

On May 18, Spartan announced it would be raising its quarterly dividend by 30% to $0.065 from $0.05 per share.

It currently yields 1.8%.

The Board of Directors also authorized a 5-year stock repurchase program worth up to $50 million.

Spartan Beat By 17% in the Fiscal Fourth Quarter

On May 11, Spartan Stores reported its fiscal fourth quarter results and surprised on the Zacks Consensus for the 3rd time in the last 4 quarters. Earnings per share were 34 cents compared to the consensus of 29 cents. The company earned 29 cents in the year ago quarter.

Earnings were boosted by sales which rose 2.3% to $571.5 million from $558.8 million last year, as well as improved overall margins, cost control measures and increased operating efficiencies due to the company's spring 2010 warehouse consolidation initiative.

Both the Distribution and Retail segments saw sales increases in the quarter. Distribution was up 1.9% to $248.9 million and Retail rose 2.6% to $322.6 million.

Higher sales in the retail segment were due to higher retail fuel selling prices and one new supermarket even while comparable store sales fell 0.9%, excluding fuel.

Outlook for Fiscal 2012 Is Optimistic

The company's fortunes depend on the Michigan economy. The company sees that slowly improving and believes its sales trends will improve along with it.

It expects the first quarter same store sales, excluding fuel, to be in line with the fourth quarter results.

As for earnings, excluding the 53rd week, the company believes fiscal 2012 will modestly exceed fiscal 2011.

Zacks Consensus Estimates Rise

Estimates have been rising for 2011 and 2012 but cautiously.

The 2011 Zacks Consensus Estimate rose 6 cents to $1.50 in the last 2 months. That is earnings growth of 3.8%. That fits into the company's outlook of "modestly" exceeding 2011's earnings.

Similar growth of 3.3% is expected for 2012, with the Zacks Consensus Estimate jumping to $1.56 from $1.43 in the prior 60 days.

Lots of Value

Spartan Stores clearly isn't one of those stocks that is a fast grower. Instead, investors get value.

Shares have rallied to 2-year highs in recent weeks but are still well below their pre-recession level.

In addition to a P/E of 12.9 that is well under its peers at 17.8, the company also has a price-to-book ratio of just 1.4. A P/B ratio under 3.0 usually indicates value.

The company also has a dirt cheap price-to-sales (P/S) ratio of only 0.2. Its peers also are cheap by this metric, as they also have a P/S ratio of 0.2. Usually, a P/S ratio under 1.0 indicates a company is undervalued.

To round it out, Spartan Stores has a solid 1-year return on equity (ROE) of 10.8%.

With Spartan, an investor is getting a value stock that is rewarding shareholders with share buy backs and an increasing dividend.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her at twitter.com/traceyryniec.