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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: JakeStraw who wrote (41122)	1/21/2011 9:55:36 AM
From: Dan Meleney	Read Replies (2) \| Respond to of 78516

SVU...Zacks report...I find it interesting that Zacks earnings estimates put the 2012 PE at 6, target price at 7.43, and current price at 6.75. That implies a PE of 5.4 in 2012 when they think earnings will have stabilized. Hmmm...PE of 5.4 on a company with stable earnings. Hmmm. Did a person at Zacks actually put that report together, or was it a machine? Yes, I realize 2012 is out almost 2 years, but maybe this just highlights the lack of patience of customers that Wall Street is assuming. Still, I admit there is significant risk with this one, but it seems like a good one for my bucket of cigar butts.

To: JakeStraw who wrote (41122)	1/21/2011 10:24:19 AM
From: E_K_S	Read Replies (2) \| Respond to of 78516

Hi JackStraw - I did not realize that SVU's Supply Chain Business actually grew last year as the retail sales continued to fall. From the Zach's report:"...Net sales at Supply Chain Services (24.2% of the total sales in the quarter) increased 0.2% to $2,100 million in the quarter compared with $2,096 million in the prior-year quarter...." Note: 52 Weeks Ended February 27, 2010, Supply Chain Revenues $8,960 million and Operating earnings $299 million (from 2010 annual report). Noted potential risks from the analyst - From the report"...food distribution business sales to dip by 3.5%, portraying the impact of Target Corp.'s (TGT - Analyst Report) plan to allocate some of the volume for selfdistribution and Ukrop's exit from its customer list...". I didn't realize that Target was already a customer of their Supply Chain Services. It's possible for SVU's Supply Chain division to expand their services to this account (and others) through superior information technology implementation. What about new POS wireless tracking inventory systems, delivery truck GPS tracking systems, intelligent Bar code warehouse inventory management systems etc. New technology innovation(s) are easy to install and upgrade. Also, Target recently announced that they plan to open up new stores in Canada and entered into several new store lease contracts. Target Sets Canada for First Expansion Outside U.S. (Update4) noir.bloomberg.com From the article:"...Target Corp., the second-biggest discount retailer in the U.S., agreed to buy store leases in Canada for C$1.83 billion ($1.85 billion) to expand outside the U.S. for the first time in its history. The leasehold interests apply to as many as 220 sites now run by Zellers Inc., a unit of Canadian department-store chain Hudson’s Bay Co., Minneapolis-based Target said today in a statement. Target plans to open 100 to 150 sites in Canada in 2013 and 2014. ..." This is a big opportunity for SVU's Supply Chain Business to expand into Canada and become international. They already have the warehouse facilities and distribution trucks just across the border. The analysts still do not assign a higher PE to the sales derived from this business segment. Even at a 10 PE this division contributed $1.42/share earnings for 2010 ($299 million/212 million shares)! That translates to a share price of $14.20/share (less debt). ----------------------------------------------------------------------- I just do not think the analysts get it and they believe that the Supply Chain Services Division is "tied" to SVU"s retail segment. EKS