SUPERVALU (SVU) Stock – Is SVU a Buy, Sell or Hold?
SUPERVALU, Inc. (SVU) is a wholesale distributor to independent retail customers in the United States. It operates various food retail stores under popular banners, including Star Market, Acme Markets, Jewel-Osco, Shaw's Supermarkets, Star Markets and Albertsons. So far in 2013-2014, over the review period, the company's stock has risen 139.18% in value.
An ambitious reinvention plan, with Cerberus Capital injecting much needed cash into SVU, has breathed new life into the sagging company.
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As a result, the company has also trimmed a lot of fat by agreeing to sell off over 877 units of Albertsons, Jewel-Osco, Acme, Shaw's and Star Market , Osco and Sav-on in-store pharmacies.
This restructuring will definitely make SUPERVALU into a more potent, leaner and agile competitor. And through this cash injection, the company has also managed to significantly reduce its debt obligations, thereby fortifying its balance sheet.
These have been primary drivers for the sharp share price increase.
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The outlook for 2014-2015 depends on how well SUPERVALU management executes on its forward-looking plans. While the Save-A-Lot format may generate higher returns to the bottom line, the company faces stiff competition from giants like Wal-Mart, which continues to roll out between 700 and 800 small-footprint stores annually, which could compete directly with Save-A-lot.
Another factor for investors to watch for in 2014 and beyond is the impact that dollar stores might have on the "new" SUPERVALU.
