More than a month has gone by since the last earnings report for SuperValu Inc. . Shares have lost about 4.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
SUPERVALU Tops Q2 Earnings & Sales, Reiterates View
SUPERVALU reported better-than-expected sales and earnings in second-quarter fiscal 2018.
The company reported adjusted earnings per share of 46 cents that surpassed the Zacks Consensus Estimate of 35 cents and the year-ago earnings of 21 cents. Robust earnings were driven by higher sales in the Wholesale business and the benefits from the completed acquisition of Unified Grocers in June.
Though the company reported a strong second quarter, its share performance has been unimpressive due to negative surprises reported in two of the past four quarters.
Quarter in Detail
SUPERVALU’s net sales rose 35% year over year to $3,800 million. Also, the top line surpassed the Zacks Consensus Estimate of 3,758 million. This upside was backed by increased sales witnessed at the Wholesale segment, but were hurt by decline in Retail net sales.
Gross profit for the quarter amounted $428 million that depicted 8% growth from the prior year. However, margin contracted 280 basis points to 11.3%, owing to store closing costs and changes in business segment mix. Wholesale segment accounted for a large portion of the total sales and gross profit during the quarter.
During the quarter, SUPERVALU’s operating loss was of $7 million, as compared with the operating earnings of $58 million in the prior-year period. This was caused by higher selling and administrative expenses.
Segment Details
Wholesale: Net sales at Wholesale business grew 58% year over year to $2.74 billion, mainly driven by the revenues from Unified Grocers business. Additionally, the segment also gained from sales to new customers and stores. These were partially offset by reduced military sales and stores that no longer receive supplies from SUPERVALU. Also, the segment’s operating income totaled $61 million, up from $58 million in the year-ago quarter.
Retail: Net sales at Retail slipped 1.1% to $1.02 billion. This decrease represents store closures and unfavorable identical store sales of 3.5%, partly mitigated by sales from acquired and new outlets.
In fact, we note that this leading grocery dealer is witnessing sluggish sales in the retail business due to competitive pressures. This is the tenth consecutive quarter of sales decline of the retail segment.
Further, the segment reported operating loss of $58 million, wider than the operating loss of $12 million in the year-ago quarter. The downside was driven by lower sales and reduced gross margin owing to enhanced promotional activities.
Corporate: During the second quarter, fees earned under services agreements were down 2.4% to $40 million. Further, the segment delivered operating loss of $10 million, as against operating income of $12 million delivered in the year-ago quarter.
Financial Update
The company’s cash and cash equivalents stood at $209 million as of Sep 9 compared to $252 million as of Jun 17.
Long-term debt was $1,601 million and total stockholders’ equity totaled $373 million as of Sep 9, compared with long-term debt of $1,282 billion and stockholders’ equity of $397 million as of Jun 17.
Further, the company’s year-to-date net cash flows from operating activities of continuing operations amounted $116 million, as compared with $208 million in the previous year.
Outlook
For fiscal 2018, management continues to expect adjusted EBITDA, including Unified Grocers of $475-$495 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the past month as none of them issued any earnings estimate revisions.
VGM Scores
At this time, the stock has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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SuperValu (SVU) Down 4.5% Since Earnings Report: Can It Rebound?
More than a month has gone by since the last earnings report for SuperValu Inc. . Shares have lost about 4.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
SUPERVALU Tops Q2 Earnings & Sales, Reiterates View
SUPERVALU reported better-than-expected sales and earnings in second-quarter fiscal 2018.
The company reported adjusted earnings per share of 46 cents that surpassed the Zacks Consensus Estimate of 35 cents and the year-ago earnings of 21 cents. Robust earnings were driven by higher sales in the Wholesale business and the benefits from the completed acquisition of Unified Grocers in June.
Though the company reported a strong second quarter, its share performance has been unimpressive due to negative surprises reported in two of the past four quarters.
Quarter in Detail
SUPERVALU’s net sales rose 35% year over year to $3,800 million. Also, the top line surpassed the Zacks Consensus Estimate of 3,758 million. This upside was backed by increased sales witnessed at the Wholesale segment, but were hurt by decline in Retail net sales.
Gross profit for the quarter amounted $428 million that depicted 8% growth from the prior year. However, margin contracted 280 basis points to 11.3%, owing to store closing costs and changes in business segment mix. Wholesale segment accounted for a large portion of the total sales and gross profit during the quarter.
During the quarter, SUPERVALU’s operating loss was of $7 million, as compared with the operating earnings of $58 million in the prior-year period. This was caused by higher selling and administrative expenses.
Segment Details
Wholesale: Net sales at Wholesale business grew 58% year over year to $2.74 billion, mainly driven by the revenues from Unified Grocers business. Additionally, the segment also gained from sales to new customers and stores. These were partially offset by reduced military sales and stores that no longer receive supplies from SUPERVALU. Also, the segment’s operating income totaled $61 million, up from $58 million in the year-ago quarter.
Retail: Net sales at Retail slipped 1.1% to $1.02 billion. This decrease represents store closures and unfavorable identical store sales of 3.5%, partly mitigated by sales from acquired and new outlets.
In fact, we note that this leading grocery dealer is witnessing sluggish sales in the retail business due to competitive pressures. This is the tenth consecutive quarter of sales decline of the retail segment.
Further, the segment reported operating loss of $58 million, wider than the operating loss of $12 million in the year-ago quarter. The downside was driven by lower sales and reduced gross margin owing to enhanced promotional activities.
Corporate: During the second quarter, fees earned under services agreements were down 2.4% to $40 million. Further, the segment delivered operating loss of $10 million, as against operating income of $12 million delivered in the year-ago quarter.
Financial Update
The company’s cash and cash equivalents stood at $209 million as of Sep 9 compared to $252 million as of Jun 17.
Long-term debt was $1,601 million and total stockholders’ equity totaled $373 million as of Sep 9, compared with long-term debt of $1,282 billion and stockholders’ equity of $397 million as of Jun 17.
Further, the company’s year-to-date net cash flows from operating activities of continuing operations amounted $116 million, as compared with $208 million in the previous year.
Outlook
For fiscal 2018, management continues to expect adjusted EBITDA, including Unified Grocers of $475-$495 million.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the past month as none of them issued any earnings estimate revisions.
VGM Scores
At this time, the stock has an average Growth Score of C, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.