Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: KyrosL who wrote (47383)	4/11/2012 11:22:00 AM
From: KyrosL	Read Replies (3) \| Respond to of 78462

SVU -- My guess is Credit Suisse has lots of clients short SVU. Analyst Actions: Supervalu Ests Revised, Target Price Lowered at Credit Suisse 04/11 10:58 AM 10:58 AM EDT, 04/11/2012 (MidnightTrader) -- Stock Rallies on Less Bad Quarter, but Significant Challenges Remain; Revising Estimates & Lowering Target Price to $6 (from $7). Credit Suisse View: Supervalu's ( SVU:$6.56,00$0.43,007.01%) Q4 results were better than extremely low expectations heading into the quarter, but overall earnings quality was still poor and it is clear that significant fundamental challenges remain. EPS of $0.38 exceeded consensus of $0.35, but included a $0.07 benefit from a lower than expected LIFO charge and tax rate. IDs (-1.9%) were better than feared given deteriorating industry trends and actually improved sequentially, but sharp volume declines and the company's inability to drive top line expansion at the peak of the inflationary cycle simply highlight the tough road ahead. The FIFO gross margin was down a disappointing 43 bps, but cost control was strong once again (SG&A down 6.5% YOY). Guidance for 2012 of $1.27-1.42 exceeded consensus of $1.19, but still implies further deterioration in EBITDA and is probably the best case scenario. We continue to recommend that investors avoid this name. While management believes its price investments are beginning to gain some traction, the company is still a long way off from delivering positive sales growth and stabilizing EBITDA in our view. The Good/The Bad: (+) ID growth improved sequentially to -1.9% from -2.9% in Q3. (+) Company cost saving initiatives are on track, as YoY SG&A spending was down 6.5% in Q4. Mgmt highlighted another 75m of incremental savings for 2012. (-) FIFO GM was down 43 bps vs. our estimate of flat YoY. (-) Supply Chain Services EBITDA was down 13.3% YoY, vs. down 5.7% in Q2. (-) Management disclosed their estimated share of underfunded MEPP liabilities at approximately $1.68 billion pre-tax as of year-end. Investors should note that this is based on a market value of assets and actuarial value of liabilities. We estimate the fair value of the underfunded liability to be significantly higher. Our Estimates: We raised our 2012 estimate to $1.32 from $1.20, between management's guidance of $1.27-1.42. We also adjusted our respective 2013 and 2014 estimates to $1.36 (from $1.25) and $1.40. We lowered our TP to $6 from $7, based on our estimates of 2012 EPS of $1.32 and EBITDA of $1.8 billion. Derivative Implications: SVU's investment in price is a negative read-through for the industry, but may not be aggressive enough to cause a material reaction from competitors. Price: 6.53, Change: +0.40, Percent Change: +6.6