Back to top

Analyst Blog

Safeway Inc. (SWY - Analyst Report) is set to report fourth quarter and full year 2012 results on Feb 21. Last quarter, this food and drug retailer posted a positive earnings surprise of 7.14%. Let’s see how things are shaping up prior to the announcement.

Safeway’s Growth Profile in the Last Quarter

The company was affected by a slowdown in identical-store sales (excluding fuel) and lower Canadian exchange rate in the third quarter. Larger-than-expected weakening in price inflation influenced identical-store sales. However, volume trends are expected to improve with easing of inflation. Further, its “Just for U” loyalty program posted an encouraging performance.

Safeway also witnessed margin contraction due to higher expenses related to the launch of its loyalty program and change in sales mix in the last reported quarter. Notably, the company has undertaken cost saving initiatives to brace margin pressure. 

Earnings Whispers?

Our proven model does not conclusively suggest that Safeway is likely to beat earnings estimate this quarter. This is because a stock needs to have a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) as well as a Zacks Rank #1, 2 or 3 for this to happen. This, however, is not the case for Safeway as seen below:

Zacks Earnings ESP: The Most Accurate Estimate stands at $0.76 and the Zacks Consensus Estimate is also pegged at $0.76. This comes to a difference of 0.00%.

Zacks Rank #3 (Hold): Safeway carries a Zacks Rank #3 which lowers the predictive power of ESP. The Zacks Rank #3 along with earnings ESP of 0.00% makes the surprise prediction difficult.

Other Stocks to Consider

Here are some other companies that may be considered as our model shows they have the right ingredients to post an earnings beat this quarter:

Abercrombie & Fitch (ANF - Analyst Report), Earnings ESP of 1.04% and Zacks Rank #1 (Strong Buy)

Kroger (KR - Analyst Report), Earnings ESP of 2.90% and Zacks Rank #2 (Buy)

Walgreens (WAG - Analyst Report), Earnings ESP of 2.11% and Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
HI CRUSH PA… HCLP 68.05 +4.74%
CTPARTNERS… CTP 12.91 +3.12%
QIHOO 360 T… QIHU 90.56 +3.11%
HOLLYSYS AU… HOLI 22.85 +2.97%
BONANZA CRE… BCEI 61.57 +2.94%