Zacks Investment Research downgraded Nash Finch Company (NAFC) to a Zacks Rank #5 (Strong Sell) on Mar 19. Weak fourth quarter 2012 results, particularly due to sluggish Military segment performance, resulted in the downgrade.
Why the Downgrade?
The company’s fourth quarter proved to be weak considering the financial results disclosed on Feb 28, 2013. Nash Finch’s adjusted earnings of 49 cents per share declined 49.5% from 97 cents per share in the year-ago period. Nash Finch's total sales also fell 1.1% to $1.14 billion due to softness in Military export sales. Sales also missed the Zacks Consensus Estimate of $1.19 billion.
Nash Finch’s comparable sales declined 4.1% from the prior-year quarter. The dip in comparable sales was due to regular sale or closing of retail stores.
In addition, the company has been experiencing disappointing results from its Military segment due to lower margins. In addition, it faces extensive pressure from supermarket company SuperValu Inc (SVU), which provides advanced facilities to commissaries like employing military business consultants to ensure efficient and accurate delivery of products, which further pressurizes Nash Finch.
Also, the earnings estimate for Nash Finch has gone down in the last 30 days following the disappointing results. For 2013, the Zacks Consensus Estimate declined 7.1% to $2.24 per share while that for 2014 plummeted 17.3% to $1.87.
Other Stocks to Consider
Not all stocks are performing as poorly as Nash Finch. Other retail and wholesale stocks with favorable Zacks Rank include Green Mountain Coffee Roasters, Inc. (GMCR) carrying a Zacks Rank #1 (Strong Buy) and Natural Grocers By Vitamin Cotta (NGVC) carrying a Zacks Rank #2 (Buy)Read the Full Research Report on SVU
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