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SUPERVALU INC. (SVU): Will A Much Smaller Company Boost Profits?

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SUPERVALU INC. (NYSE:SVU)On Wednesday, SUPERVALU INC. (NYSE:SVU) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed, knee-jerk reaction to news that turns out to be exactly the wrong move.

SUPERVALU INC. (NYSE:SVU) has gone through some tough times in recent years, struggling to survive in the low-margin grocery business. But recent moves have given it a path forward, and the stock has reflected increased enthusiasm about the company’s future. Let’s take an early look at what’s been happening with SUPERVALU INC. (NYSE:SVU) over the past quarter and what we’re likely to see in its quarterly report.

Stats on SUPERVALU

Analyst EPS Estimate $0.18
Change From Year-Ago EPS (53%)
Revenue Estimate $7.86 billion
Change From Year-Ago Revenue (4.5%)
Earnings Beats in Past 4 Quarters 1

Source: Yahoo! Finance.

Will SUPERVALU hold its own this quarter?
In recent months, analysts have held stable on SUPERVALU’s short-term earnings prospects, although they’ve cut their full-year fiscal 2014 estimates by $0.03 per share. Investors appear much more optimistic, however, with the stock having risen almost 50% since mid-January.

The big news for SUPERVALU came at the beginning of the year, when private equity firm Cerberus Capital agreed to buy the company’s Albertsons, Jewel-Osco, Acme, Shaw’s, and Star Market chains for $3.3 billion. Given SUPERVALU INC. (NYSE:SVU)’s immense debt levels, it didn’t have the capital to renovate its stores to keep up with competing chains, and the deal provides SUPERVALU INC. (NYSE:SVU) with cash to help bolster the prospects for its continuing operations, which include Cub, Farm Fresh, and other chains, as well as its Save-A-Lot discount stores and wholesale grocery distribution unit. The deal was finalized a month ago, sending shares rising again as the sale went without a hitch.

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