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SUPERVALU Inc. Message Board

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  • ranni.malmsteen ranni.malmsteen Jun 20, 2010 12:45 PM Flag

    A Supervalu

    "southbuckey: I believe at its current price it is undervalued. SVU trades at a PE of 7. It is projected to earn about $1.80 per share this year and next year. The dividend, at $.35 a share is easily covered."




    I agree with you, SVU may be undervalued, but i have little bit different reasoning. And i think, these ex-LBO companies we should take also debt component to consideration (EV), not only market price (P/E) number.


    I made quick comparison, to look valuations on these ex-lbo companies (SuperValu & Dollar General (ipo recently). It seems to me, that after last years haircut SVU stock price, it's today priced like before Albertson's buyout. Not super value, but not expensive either.

    It was little bit cheaper before LBO (EV), but now with bigger debt component, and with more balanced capital allocation decisions(?), between share repurchases & deleveraging,
    this could be sound investment.

    Means, when interest rates are low & stock is trading so low, they should more aggressively repurchase shares. Sad reality is, that they seems rather buys back only inflated prices.
    This is just my view on their capital allocation, i don't know how viable their business today is compared to before Buyout.



    If you compare to other ex-LBO retailers, like Dollar General (DG), where Kravis still waiting ~-50-70% haircut (lol). SVU is screaming buy, and lot promising investment oppoturnity, but no so, if you compare relatively other opportunities in market place.

    Dollar General DG VS SuperValu SVU
    Market Cap:_______10.28B___2.73B
    Enterprise Value__13.51B___10.15B
    Trailing P/E______25.57____6.95
    Forward P/E_______14.78____6.80
    EV/Revenue________1.11_____0.25
    EV/EBITDA_________10.60____4.53

    In my view, Dollar General's higher profit margins doesn't justify that kind of overvaluation.



    Summary: i don't have positions neither one, but if i have to chose, i would say:



    BUY Supervalu $12.8

    Short Dollar General $30.1


    I'm sorry of my weak English

 
SVU
9.37+0.02(+0.21%)Nov 26 4:02 PMEST

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