SUPERVALU Earnings Expectations Sink on Ongoing Industry Woes

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SUPERVALU Inc. (NYSE: SVU) is scheduled to release its fiscal third-quarter financial results before the markets open on Wednesday. The consensus estimates are calling for $0.14 in earnings per share (EPS) and $3.93 billion in revenue. The same period from last year reportedly had EPS of $0.16 and $4.11 billion in revenue. Note too that the EPS estimate was a penny higher 30 days ago.

Last year was a tough one for supermarket and grocery store operators, and expectations for 2017 are not particularly high either. SUPERVALU isn’t alone in this. At the end of November, larger rival Kroger Co. (NYSE: KR) posted mixed fiscal third-quarter results and narrowed the range of its earnings guidance for the full fiscal year. So far, analysts expect its bottom line to slip in the current quarter too, but with some top line growth. That trend extends to consensus forecasts for Sprouts Farmers Market Inc. (NYSE: SFM) and Whole Foods Market Inc. (NYSE: WFM) as well, and both are expected to share their latest results in the beginning of February.

The competitive environment and deflationary headwinds are expected to continue this year, with SUPERVALU not only facing off against its peers, but the likes of Wal-Mart and Amazon.com as well.

A few analysts weighed in on SUPERVALU ahead of the earnings report:

  • RBC Capital Markets has just set its rating at Hold, along with a $6 price target.
  • Looking back to before the election, Pivotal Research reiterated a Buy rating but lowered its price target from $8 to $7.
  • Deutsche Bank has a Hold rating with a $5 price target.
  • Telsey Advisory Group has a Market Perform rating with a target price of $5.50.

So far in 2017, SUPERVALU has underperformed the broad markets, with the stock essentially flat. However, it has outperformed Kroger and Whole Foods in that time.

Shares of SUPERVALU closed trading at $4.68 on Monday, with a consensus analyst price target of $6.00 and a 52-week trading range of $3.94 to $6.17.