I have good profits from SVU, in spite of its sickening decline, mainly in two trades, one buying low before they announced their earnings in April, and again when it fell back after earnings and then bounced again. I sold the last of this last trade after their latest earnings in the after hours a bit below where it closed.
SVU and SWY are using cash differently. Looking at the cash flow summaries on Yahoo, it looks like in the last 4 years SWY kept debt constant, bought back stock worth $2.4 billion, and increased dividends. On the other hand in the last 3 years SVU reduced debt by $2.3 billion, bought back no stock, but did give a generous dividend, even after cutting it in half two years ago. As a comparison, KR bought back $2.1 billion while not substantially increasing debt and providing an increasing dividend. Looks like SWY and KR have similar policies.
People describe SVU as heavily, even fatally, indebted. But it has made progress. My measure for debt in the grocers is debt to revenue. SVU ratio is 0.176, SWY 0.152 , KR 0.088. So KR is half as indebted relative to its revenues compare to SVU and SWY, but SVU and SWY are close. If the cash use pattern continues for another two years, SVU will have the same ratio as SWY. |
