So it is no surprise that the company jumped at an offer from Canada’s Empire Co. Ltd. to acquire Safeway’s Canadian assets for $5.7 billion in cash. That amount was higher than the company’s market cap at yesterday’s close.

Canadian sales for Safeway totaled about $6.6 billion for the 12 months through March 2013, so the deal puts Empire back in the thick of the grocery store fight in Canada.

And Safeway shareholders — what do they get? Most probably expect a one-time dividend of some kind. Safeway has about 237 million shares outstanding, so the payment from Empire is worth about $24.00 per share.

Unless Safeway shares its sudden good fortune with shareholders through some kind of special dividend, today’s sale will not do an awful lot to change investors’ perception of the company. If Safeway uses the cash to pay down some of its $6.2 billion in debt, it will remain significantly leveraged. And when all that is said and done, the company’s profitability is likely to continue to decline.

The Kroger Co. (NYSE: KR) has twice as many U.S. stores as Safeway, and Whole Foods Market Inc. (NASDAQ: WFM) and The Fresh Market Inc. (NASDAQ: TFM) have far better profit margins. Discounters like Wal-Mart Stores Inc. (NYSE: WMT) and Family Dollar Stores Inc. (NYSE: FDO) offer low food prices as an enticement to attract more customers into the megastores. Safeway’s closest competitor may be Supervalu Inc. (NYSE: SVU), which has seen shares jump nearly 150% so far this year.

Safeway has not indicated that it has any plan in place to compete successfully in the grocery market. The Empire deal was unsolicited, so Safeway cannot even take any credit for finding a deep-pocketed buyer. This deal will not change what is fundamentally wrong at Safeway.

Safeway’s shares are up about 9.7% at $25.37, in a 52-week range of $14.73 to $28.42.

AllScripts Healthcare Solutions Inc. (NASDAQ: MDRX) was raised to Buy from Neutral at Citigroup.

Copa Holdings S.A. (NYSE: CPA) was raised to Buy from Hold at Deutsche Bank.

Dean Foods Co. (NYSE: DF) was raised to Buy from Neutral at Janney.

Emulex Corp. (NYSE: ELX) was raised to Neutral from Sell at Goldman Sachs.

Fusion-io Inc. (NYSE: FIO) was raised to Buy from Neutral by UBS.

Kroger Co. (NYSE: KR) was maintained Outperform and the target price was raised to $38 from $33 by Credit Suisse.

Merrill Lynch issued its top list of high dividend large cap pharma stocks to buy.

Nationstar Mortgage Holdings Inc. (NYSE: NSM) was named Bull of the Day with solid growth potential and appropriate for all portfolios by Zacks Investment Research.

Read also: Analysts Pick Four Stocks to Double in Last Week

UBS has issued its list of semiconductor stocks to buy.

WellPoint Inc. (NYSE: WLP) was raised to Buy from Hold at Jefferies.

Yahoo! Inc. (NASDAQ: YHOO) was maintained on the Conviction Buy List and the price target was raised to $30 from $27 by Goldman Sachs.

Read also: Today’s Top Analyst Downgrades and Cautious Research Calls

Blackhawk Network Holdings Inc. (NASDAQ: HAWK) saw its quiet period come to an end and brokerage firms from the underwriting syndicate have initiated coverage: started as Buy at Deutsche Bank started as Buy at Goldman Sachs started as Outperform at Wells Fargo, started as Overweight at Piper Jaffray, started as Outperform at Raymond James and started as Neutral at Citigroup and at Bank of America/Merrill Lynch.

Oppenheimer strategist raised the firm’s 2013 year-end price S&P 500 targets on Monday to 1,730 for the index and $109.00 for the total earnings per share estimate.

The difference seems to be that Supervalu has almost entirely revamped its top management and appears poised to make some big changes in the company’s Sav-A-Lot stores. Safeway offered no such promise, even though the company reaffirmed its previous guidance.

What this means for Supervalu is that it is going to put up a fight in the discount space against the likes of Wal-Mart Stores Inc. (NYSE: WMT) and Family Dollar Stores Inc. (NYSE: FDO), where a lot of the growth has been in grocery sales. Whether or not it works is all a matter of execution and investment, and Supervalu has apparently persuaded at least some investors that the store means to play hardball.

Safeway, which has less than half as many stores as Supervalu, will continue to compete against the The Kroger Co. (NYSE: KR), The Fresh Market Inc. (NASDAQ: TFM), and Whole Foods Market Inc. (NASDAQ: WFM). These may not be fair fights. Kroger’s market cap is about three times Safeway’s and the chain has been on a roll. Whole Foods is even a bit larger than Kroger, and together with Fresh Market address the higher-end organic and specialty foods markets.

What are Safeway’s choices? Kroger, which reports earnings on May 7th, is expected to post EPS of $0.88 on revenues of $30.16 billion. That’s a $6 billion boost to last quarter’s revenues though the EPS estimate is flat. Safeway’s revenues were forecast to rise modestly in the first quarter and failed to do that.

Both Fresh Market and Whole Foods have much higher margins than Safeway, and discounters like Walmart and Family Dollar Stores offer low food prices as an enticement to attract more customers into the megastores.

Safeway’s stock collapse today is the result of either no announced plan to work itself out of the fix its in or a poorly communicated plan. Investors are free to wonder if management has even faced the issue and the result is that investors have found no reason to believe that Safeway is going to prosper, so what’s the point of holding the stock?

Shares are down nearly 17% in the early afternoon, at $23.52 in a 52-week range of $14.73 to $28.41. The stock fell as low as $22.90 earlier today.

The U.S. dollar index fell 0.45% today, now at 82.089. The GSCI commodity index is down 0.7% at 641.74, with commodities prices mostly higher today. WTI crude oil closed up 1.3% today, at $91.56 a barrel. Brent crude trades up 0.4% at $111.10 a barrel. Natural gas is up 3.3% today at about $3.58 per million BTUs after a larger-than-expected drawdown on stocks (more coverage here). Gold settled up fractionally today at $1,575.10 an ounce.

The unofficial closing bells put the DJIA up more than 33 points to 14,329.57 (0.23%), the NASDAQ rose nearly 10 points (0.30%) to 3,232.09, and the S&P 500 rose 0.18% or nearly 3 points to 1,544.28.

There were a several analyst upgrades and downgrades today, including SAP AG (NYSE: SAP) raised to ‘overweight’ at HSBC; Clean Harbors Inc. (NYSE: CLH) raised to ‘outperform’ at Baird; Angie’s List Inc. (NASDAQ: ANGI) started as ‘overweight’ at Piper Jaffray; SandRidge Energy Inc. (NYSE: SD) cut to ‘underperform’ at BMO; and Big Lots Inc. (NYSE: BIG) raised to ‘hold’ at Deutsche Bank, cut to ‘hold’ at Canaccord Genuity, and cut to ‘underperform’ at Raymond James.

Earnings reports since markets closed last night resulted in several price moves today, including these: Alon USA Energy Inc. (NYSE: ALJ) is down 4% at $19.00; PetSmart Inc. (NASDAQ: PETM) is down 6.6% at $62.17; Vail Resorts Inc. (NYSE: MTN) is up 7.4% at $60.87 after posting a new 52-week high of $61.83 earlier today; Ciena Corp. (NASDAQ: CIEN) is up 18.3% at $17.67; E Commerce China Dangdang Inc. (NASDAQ: DANG) is down 5.7% at $3.94; James River Coal Co. (NASDAQ: JRCC) is down 6.7% at $2.38; Kroger Co. (NYSE: KR) is up 3.3% at $30.34 after posting a new 52-week high of $30.62 earlier today (more coverage here); and Smithfield Foods Inc. (NYSE: SFD) is up 9.6% at $24.43 after posting a new 52-week high of $25.03 earlier today (more coverage here).

Before markets open tomorrow morning we are scheduled to hear from Finisar Corp. (NASDAQ: FNSR), H & R Block Inc. (NYSE: HRB), Pandora Media Inc. (NYSE: P), Workday Inc. (NYSE: WDAY), Ann Inc. (NYSE: ANN), and Foot Locker Inc. (NYSE: FL).

Some standouts among high-volume stocks today include:

Advanced Micro Devices (NYSE: AMD) is up 4.1% at $2.53. This chipmaker had no news today, but the enthusiasm over the company’s inclusion in the coming PlayStation 4 continues.

Petroleo Brasileiro SA (NYSE: PBR) is up 5.1% at $17.53. The Brazilian oil & gas firm pushed higher for the second day in a row following the announcement of its hike to diesel fuel prices.

Facebook Inc. (NASDAQ: FB) is up 4.2% at $28.61. The social network company announced a new look for its news feed today, making room for more ads and pushing stock prices up.

Stay tuned for Friday. Fed Governor Elizabeth Duke is giving a speech. We have also noted the following events on the schedule (all times Eastern):

• 8:30 a.m. – Employment: non-farm payroll, unemployment rate
• 10:00 a.m. – Wholesale trade

The grocery chain reported quarterly adjusted diluted earnings per share (EPS) of $0.88 on revenues of $24.15 billion. In the same period a year ago, Kroger reported EPS of $0.63 on revenue of $21.41 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.70 and $24 billion in revenue.

For the full year, Kroger reported EPS of $2.63 on revenues of $96.75 billion. The consensus estimate called for EPS of $2.46 on revenues of $96.37 billion.

Backing out income for the extra week in the quarter, Kroger’s quarterly diluted EPS totaled $0.77 and full-year EPS totaled $2.52.

The company’s CEO said:

Kroger’s unique value offering of better service, great products and an enjoyable shopping experience with low prices continues to resonate with a full range of customers. The result is an industry-leading 37 consecutive quarters of positive identical sales growth.

The company guided 2013 diluted EPS at $2.71 to $2.79. The EPS estimate is higher than the consensus estimate of $2.64. Kroger also expects same-store sales growth in the range of 2.5% to 3.5%.

Kroger’s shares are up more than 25% in the past 12 months, compared with a share price rise of around 14% for Safeway Inc. (NYSE: SWY) and share price decline of about 36% at Supervalu Inc. (NYSE: SVU).

Kroger’s shares were up nearly 3% in the first few minutes of trading this morning, at $30.25, a new 52-week high. The prior 52-week range was $20.98 to $29.76. Thomson Reuters had a consensus analyst price target of around $28.30 before today’s results were announced.

The U.S. dollar index rose 0.45% today, now at 82.461. The GSCI commodity index is up 0.9% at 645.94, with commodities prices mostly lower today. WTI crude oil closed down 0.4% today, at $90.43 a barrel following a larger than expected expansion of inventories (more coverage here). Brent crude trades down 0.6% at $110.99 a barrel. Natural gas is down 1.5% today at about $3.48 per million BTUs. Gold settled flat today at $1,574.90 an ounce.

The unofficial closing bells put the DJIA up nearly 43 points to 14,296.39 (0.30%), the NASDAQ fell about 2 points (-0.05%) to 3,222.37, and the S&P 500 rose 0.11% or nearly 2 points to 1,541.47.

There were a several analyst upgrades and downgrades today, including J.C. Penney Co. Inc. (NYSE: JCP) cut to ‘neutral’ at Citigroup and cut to ‘perform’ at Oppenheimer; IntercontinentalExchange Inc. (NYSE: ICE) raised to ‘outperform’ at KBW; Best Buy Co. Inc. (NYSE: BBY) raised to ‘buy’ at Jefferies; Qualcomm Corp. (NASDAQ: QCOM) maintained as ‘buy’ but removed from the Conviction Buy List at Goldman Sachs; and Vivus Inc. (NASDAQ: VVUS) started as ‘overweight’ at Piper Jaffray.

Earnings reports since markets closed last night resulted in several price moves today, including these: Gevo Inc. (NASDAQ: GEVO) is up 7% at $1.99; Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) is down 7.8% at $32.09; Smith & Wesson Holding Corp. (NASDAQ: SWHC) is up 5% at $9.71 (more coverage here); Verifone Systems Inc. (NYSE: PAY) is up 7.9% at $20.77; American Eagle Outfitters Inc. (NYSE: AEO) is down 10.7% at $20.13; Big Lots Inc. (NYSE: BIG) is up 6.1% at $35.96 (more coverage here); Fresh Market Inc. (NASDAQ: TFM) is down 8.8% at $38.79 after posting a new 52-week low of $36.51 earlier today; Hovnanian Enterprises Inc. (NYSE: HOV) is down 3.9% at $5.86; Staples Inc. (NASDAQ: SPLS) is down 8.7% at $12.13 (more coverage here); and Suntech Power Holdings Co. Ltd. (NYSE: STP) is down 1.7% at $1.19 (more solar coverage here).

Before markets open tomorrow morning we are scheduled to hear from Alon USA Energy Inc. (NYSE: ALJ), PetSmart Inc. (NASDAQ: PETM), Vail Resorts Inc. (NYSE: MTN), Ciena Corp. (NASDAQ: CIEN), E Commerce China Dangdang Inc. (NASDAQ: DANG), James River Coal Co. (NASDAQ: JRCC), Kroger Co. (NYSE: KR), and Smithfield Foods Inc. (NYSE: SFD).

Some standouts from today include the following stocks:

MGIC Investment Corp. (NYSE: MTG) is up 3.6% at $5.53 after posting a new 52-week high of $6.19 earlier today. This marks the third consecutive day the insurance company continues to find favor with investors.

Petroleo Brasileiro SA (NYSE: PBR) is up 14.8% at $16.63. The Brazilian oil & gas firm known as Petrobras was allowed to raise its price for diesel fuel by 5% today.

BlackBerry (NASDAQ: BBRY) is up 7.3% at $13.50. The mobile smartphone maker continues to get some love from analysts after its U.K. launch and a week ahead of its launch in the U.S.

Stay tuned for Thursday. Fed Governor Jerome Powell is giving a speech. Retail stores will be reporting February same-store sales throughout the day. We have also noted the following events on the schedule (all times Eastern):

• 7:30 a.m. – Challenger job-cut report
• 8:30 a.m. – New claims for unemployment benefits
• 8:30 a.m. – International trade
• 8:30 a.m. – Productivity and costs
• 10:00 a.m. – Quarterly services survey
• 10:30 a.m. – EIA weekly natural gas storage report
• 3:00 p.m. – Consumer credit
• 4:30 p.m. – Fed balance sheet and money supply

For the quarter, the grocery store chain posted adjusted diluted earnings per share (EPS) of $0.94 on revenues of $13.77 billion. In the same period a year ago, the company reported EPS of $0.67 on sales of $13.6 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.76 EPS and $13.7 billion in sales.

For the full year, Safeway posted adjusted EPS of $2.15 on revenues of $44.21 billion, compared with consensus estimates calling for EPS of $2.01 on revenues of $44.09.

Adjusted results do not include a $0.12 per share benefit related to a legal settlement.

Competitor Kroger Co. (NYSE: KR) closed its fourth quarter at the end of January and is expected to post EPS of $0.70 on sales of $24.06 billion when it reports results on March 7. Last quarter, the company beat EPS estimates by three cents.

Safeway’s CEO said:

While the calendar shift of New Year’s Eve and the shift to generic drugs had a significant drag on reported ID [identical store] sales, our just for U and fuel loyalty programs are driving market share gains and profits.

The company’s same-store sales fell 0.8% in the fourth quarter due to the calendar shift and a hit of 0.7% due to generic drug sales. Higher gift and prepaid card sales led to the overall rise in revenues. Gross margins for the quarter were down year-over-year by 0.21% to 26.5%, and down 0.5% for the full year to 26.51%.

Safeway said it will issue guidance on March 6, but the consensus estimate for first-quarter EPS is $0.34 on sales of $10.14 billion. For the full year, the consensus estimates call for EPS of $2.08 on revenues of $44.9 billion.

Safeway and Kroger continue to face increasing competition from the big discount retailers like Wal-Mart Stores Inc. (NYSE: WMT) and Family Dollar Stores Inc. (NYSE: FDO) that are pushing grocery sales harder in an effort to attract more customers and sales.

Safeway’s shares are up 6.1% in the first few minutes of trading today, at $21.35 in a 52-week range is $14.73 to $22.94. Thomson Reuters had a consensus analyst price target of around $18.60 before today’s report. Once again, the analysts appear to be behind the market.

Amgen Inc. (NASDAQ: AMGN) cut to Market Perform at William Blair.

AOL Inc. (NYSE: AOL) raised to Outperform at RBC.

Banco Bilbao Vizcaya Argentaria S.A. (NYSE: BBVA) raised to Neutral at JPMorgan.

Bebe Stores Inc. (NASDAQ: BEBE) named Bear of the Day as the fashion retailer is unlikely to see better days anytime soon by Zacks.

Charles Schwab Corp. (NYSE: SCHW) cut to Sell from Neutral at Citigroup.

CoreLogic Inc. (NYSE: CLGX) named Bull of the Day by Zacks as it will continue to benefit from the current mortgage refinancing boom.

Elan Corp. (NYSE: ELN) cut to Neutral at UBS.

Hartford Financial Services Group Inc. (NYSE: HIG) reiterated Buy and raised target to $28 at Argus.

Kroger Co. (NYSE: KR) raised to Neutral at Goldman Sachs.

Nike Inc. (NYSE: NKE) raised to Overweight at J.P. Morgan.

Sigma-Aldrich Corp. (NASDAQ: SIAL) cut to Sell at UBS.

Tesoro Corp. (NYSE: TSO) raised to Buy at BofA/Merrill Lynch.

USA Compression Partners L.P. (NYSE: USAC) started as Overweight at J.P. Morgan, started as Buy at Goldman Sachs and started as Market Perform at Wells Fargo.

U.S. Bancorp (NYSE: USB) raised to Buy at Stifel Nicolaus.

VMware Inc. (NYSE: VMW) raised to Overweight at Evercore Partners.

Wells Fargo & Co. (NYSE: WFC) raised to Buy at Stifel Nicolaus.

There are two macro-calls this morning worth a read. Goldman Sachs has lowered its expectations on near-term equity performance, while BofA/Merrill Lynch has issued some key small- and mid-cap secular stocks to buy.

Softbank puts an upper limit on what Sprint Nextel Corp. (NYSE: S) may pay to buy the portion of Clearwire Corp. (NASDAQ: CLWR) it does not already own. (Reuters)

AMR pilots meet with the firm’s CEO and say they are in favor of a buyout by US Airways Group Inc. (NYSE: LCC). (Reuters)

Wal-Mart Stores Inc. (NYSE: WMT) and Kroger Co. (NYSE: KR) may bid for the assets of Hostess. (Reuters)

While Apple Inc.’s (NASDAQ: AAPL) market share drops in China, it will release the iPhone 5 there. (Reuters)

A jury finds that the Apple iPhone violates three patents of MobileMedia Ideas. (Reuters)

Shares of Best Buy Co. Inc. (NYSE: BBY) rise almost 15% due to rumors that former chairman Richard Schulze will make a bid for the company. (Reuters)

UBS A.G. (NYSE: UBS) may settle with the government over Libor manipulation accusations. The cost could be as high as $1 billion. (WSJ)

Alcatel-Lucent S.A. (NYSE: ALU) receives $2.1 billion in new financing and its shares soar. (WSJ)

PMI data shows stronger growth in China’s manufacturing sector. (WSJ)

Deutsche Bank A.G. (NYSE: DB) says it expects a large loss because of restructuring. (WSJ)

Yahoo! Inc. (NASDAQ: YHOO) adds the co-founder of eBay Inc.’s (NASDAQ: EBAY) Paypal to its board. (WSJ)

Italy’s finance minister says the nation will not ask for aid from the European Union. (WSJ)

General Motors Co. (NYSE: GM) now manufactures pickups with more towing capacity. (WSJ)

Solar City’s (NASDAQ: SCTY) stock trades well above its IPO price on the first day it is public. (WSJ)

Oversupply severely hurts the price of most commodities. (WSJ)

State officials raise concerns that Washington’s austerity plans will undermine money given to them by the federal government. (WSJ)

Japanese business confidence falls. (FT)

The Federal Reserve begins its stress tests of banks as it seeks to focus on liquidity. (FT)

European car sales fall sharply in November, according to the European Automobile Manufacturers’ Association. (Bloomberg)

Douglas A. McIntyre

According to a report at Bloomberg that cites a “person familiar with the matter,” Wal-Mart Stores Inc. (NYSE: WMT) and Kroger Co. (NYSE: KR) are among some two dozen bidders. The bankruptcy sale of Hostess could generate $1 billion for the company’s creditors.

Previous speculation had named Flower Foods Inc. (NYSE: FLO), Campbell Soup Co. (NYSE: CPB), and Mexico’s Grupo Bimbo as likely bidders. Each already operates bakery operations and could probably tool up to produce the Hostess goodies without having to deal with the bankrupt company’s union bakers.

Not all the bidders are seeking all the assets of Hostess according to Bloomberg’s source. Some want just the cake or bread business and some are interested only in the company’s plants.

Walmart’s history with unions casts some doubt on the likelihood of a bid from the world’s largest retailer. If Walmart is the eventual acquirer, the form Hostess union bakers will likely be very unhappy. Kroger already has a contract with the United Food and Commercial Workers Union, the group that represents Hostess workers.

Paul Ausick