India markets close in 3 hours 7 minutes
  • BSE SENSEX

    40,310.37
    -375.13 (-0.92%)
     
  • Nifty 50

    11,817.50
    -112.85 (-0.95%)
     
  • USD/INR

    73.7425
    -0.1275 (-0.17%)
     
  • Dow

    28,335.57
    -28.13 (-0.10%)
     
  • Nasdaq

    11,548.28
    +42.28 (+0.37%)
     
  • BTC-INR

    965,097.81
    -458.06 (-0.05%)
     
  • CMC Crypto 200

    262.93
    +1.47 (+0.56%)
     
  • Hang Seng

    24,918.78
    +132.68 (+0.54%)
     
  • Nikkei

    23,494.34
    -22.25 (-0.09%)
     
  • EUR/INR

    87.2595
    -0.3861 (-0.44%)
     
  • GBP/INR

    96.0201
    -0.3038 (-0.32%)
     
  • AED/INR

    20.0260
    -0.0410 (-0.20%)
     
  • INR/JPY

    1.4195
    +0.0051 (+0.36%)
     
  • SGD/INR

    54.2610
    -0.1450 (-0.27%)
     

A Look at SuperValu's Rollercoaster Day on the Stock Market

Benjamin Rains
Shares of SuperValu (SVU) surged on Wednesday morning after the company posted quarterly revenue and earnings beats, but since then, its stock price has reversed course and plummeted over 11%..
Shares of SuperValu (SVU) surged on Wednesday morning after the company posted quarterly revenue and earnings beats, but since then, its stock price has reversed course and plummeted over 11%..

Shares of SuperValu SVU surged on Wednesday morning after the company posted quarterly revenue and earnings beats, but since then, its stock price has reversed course and plummeted over 11%.

One of the larger retail supermarket chains in the U.S. posted earnings of $0.46 per share, which beat our Zacks Consensus Estimate. On top of that, SuperValu’s revenues climbed 35% and also topped expectations.

Both of these positive signs helped the grocery giant’s shares soar over 7.3% premarket. Now the question is: what made investors so spooked that SuperValu stock then tanked to a new 52-week low?

One possibility is the fact that, when factoring in $43 million in after-tax charges and costs, SuperValu actually reported a $25 million net quarterly loss.

What’s more, the company’s same-store sales fell 3.5% during the quarter, while overall retail revenues dipped by 1.1%. And its overall sales were propped up by a 58% jump in SuperValu’s wholesale segment—which the company attributed mostly to sales from the company’s recent acquisition of Unified Grocers.

“We continue to make tremendous strides in driving our strategy, evidenced by another quarter of strong growth from our core Wholesale business which now represents over seventy percent of net sales,” said SuperValu President and CEO Mark Gross.

In a move to further bolster its wholesale division, SuperValu also announced on Wednesday that it entered into an agreement to acquire Associated Grocers of Florida for roughly $180 million.

SuperValu is in the midst of a business transition that will see the company focus more heavily on wholesale in the face of an uncertain retail and grocery environment. Yet its shares have already fallen by more than 42% since the start of the year.

It seems that many investors might have fled the aisles because SuperValu has tried to do too much too fast—with varying results. And even though shifting shopping habits have forced the entire retail industry to make changes, investors don’t seem too pleased with SuperValu’s new wholesale direction.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early. See Zacks' 3 Best Stocks to Play This Trend >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
SuperValu Inc. (SVU) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research