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SUPERVALU (SVU) Q4 Earnings: What to Expect from the Stock?


SUPERVALU Inc. SVU is all set to report fourth-quarter fiscal 2017 results on Apr 25, before the market opens. The question lingering in investors’ minds is, whether this leading grocery retailer will be able to post a positive earnings surprise in the to-be-reported quarter. Its earnings lagged the Zacks Consensus Estimate in two of the trailing four quarters, with an average miss of 8.9%.

SUPERVALU forms part of the Consumer Staples sector that is placed at bottom 25% of the Zacks Classified sectors (12 out of 16). Per the latest Earnings Outlook, total first-quarter 2017 earnings for the sector are expected to rise 2.7%, while revenues are projected to improve 4.0%. We observed that the Consumer Staples sector lagged the broader market over the past one year. While the Zacks categorized sector gained 5.3%, the S&P 500 index increased 11.5%.

Let’s see how things are shaping up for this announcement.

Which Way are Estimates Treading?

Let’s look at the estimate revisions in order to get a clear picture of what analysts are thinking about the company right before earnings release. The Zacks Consensus Estimate for the fourth quarter and fiscal 2017 has been stable over the past 30 days. However, the current Zacks Consensus Estimate of 9 cents and 42 cents for the fourth quarter and fiscal 2017 reflects a year-over-year plunge of 60.9% and 45.4%, respectively.

Further, analysts polled by Zacks expect revenues of $2.89 billion for the said quarter, down 26.8% from the year-ago quarter. Also, revenues for fiscal 2017 are projected to be $14.94 billion.

SuperValu Inc. Price, Consensus and EPS Surprise

SuperValu Inc. Price, Consensus and EPS Surprise | SuperValu Inc. Quote

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that SUPERVALU is likely to beat on earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

SUPERVALU has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 9 cents. Although the company’s Zacks Rank #3 increases the predictive power of ESP, we need a positive Earnings ESP in order to be confident about an earnings surprise.

Factors at Play

SUPERVALU exhibited a bearish run in the past one year due to stiff competition, deflationary environment and lower-than-expected sales. While the stock plunged over 27%, the Zacks categorized Food – Miscellaneous/Diversified industry gained 3%.

In fact, the company’s sales missed the Zacks Consensus Estimate for six straight quarters, including the third quarter. Also, it continues to face tough competitive pressure that has affected the grocery industry as a whole. Further, deflationary environment in food products and depleting footfalls at the supermarkets remain causes of concern for this grocery chain.

Nonetheless, management at SUPERVALU is trying hard to return to its growth trajectory through strategic initiatives. Evidently, the company is taking steps to rejuvenate the retail segment. Already, it has expanded its retail banners in order to create a unique identity for each of the brands. Notably, the company’s efforts to develop the store-within-a-store concept to expand its offerings and supply agreements with retailers to maintain market share is commendable. Furthermore, it completed the divestment of its Save-A-Lot business, as its recent performance has been quite disappointing.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Energizer Holdings, Inc. ENR has an Earnings ESP of +3.03% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Pinnacle Foods Inc. PF has an Earnings ESP of +2.17% and a Zacks Rank #2.

Newell Brands Inc. NWL has an Earnings ESP of +6.90% and a Zacks Rank #3.

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