Earnings Are Second Fiddle for Supervalu

January 14, 2013

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E = Equity to Debt Ratio Is Extremely High

The debt-to-equity ratio for Supervalu is one of the highest you will find in any industry. It’s an embarrassment. The balance sheet is also abysmal. The good news is that investors love improvement, and with today’s announced deal, improvement is what you will see.

	Debt-To-Equity	Cash	Long-Term Debt
SVU	919.86	$155.00 Million	$6.44 Billion
SWY	2.29	$202.80 Million	$6.40 Billion
KR	2.36	$1.36 Billion	$8.86 Billion

T = Technicals on the Stock Chart Are Mixed

If this article were written yesterday, then the technical on the stock chart would be poor. However, today isn’t yesterday, which Supervalu investors are thankful for. Over the past three years, Supervalu has underperformed Safeway Inc. (NYSE:SWY) and The Kroger Co. (NYSE:KR) by wide margins.

	1 Month	Year-To-Date	1 Year	3 Year
SVU	31.95%	42.11%	-48.54%	-72.80%
SWY	-1.98%	-4.37%	-14.05%	-11.89%
KR	-2.24%	-1.23%	8.77%	31.96%

At $3.52, Supervalu is trading above its 50-day SMA and 100-day SMA, but below its 200-day SMA.

50-Day SMA	2.74
100-Day SMA	2.54
200-Day SMA	3.53

E = Earnings Have Been Poor

Supervalu has been heading in the wrong direction for several years. There is absolutely nothing about annual revenue and earnings that would offer a logical investor confidence. Luckily, changes are being made.

	2008	2009	2010	2011	2012
Revenue ($)in billions	44.05	44.56	40.60	37.53	36.10
Diluted EPS ($)	2.76	-13.51	1.85	-7.13	-4.91

When we look at the last quarter on a YoY basis, we see a decrease in revenue, but an improvement in earnings.

	11/2011	2/2012	5/2012	8/2012	11/2012
Revenue ($)in billions	8.33	8.23	10.59	8.04	7.91
Diluted EPS ($)	-3.54	-2.00	0.19	-0.52	0.08

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