Financial Analysis: Supervalu (SVU) & Safeway (SWY)

Supervalu (NYSE: SVU) and Safeway (NYSE:SWY) are both consumer staples companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, profitability, risk, earnings, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Supervalu and Safeway, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Supervalu 1 6 2 0 2.11
Safeway 0 0 0 0 N/A

Supervalu presently has a consensus price target of $24.21, indicating a potential upside of 49.47%. Given Supervalu’s higher probable upside, research analysts plainly believe Supervalu is more favorable than Safeway.

Volatility & Risk

Supervalu has a beta of 2.29, suggesting that its stock price is 129% more volatile than the S&P 500. Comparatively, Safeway has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500.

Valuation and Earnings

This table compares Supervalu and Safeway’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Supervalu $12.48 billion 0.05 $650.00 million $15.90 1.02
Safeway N/A N/A N/A $0.12 292.50

Supervalu has higher revenue and earnings than Safeway. Supervalu is trading at a lower price-to-earnings ratio than Safeway, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

80.6% of Supervalu shares are owned by institutional investors. 1.7% of Supervalu shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Supervalu and Safeway’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Supervalu 4.17% 26.48% 2.57%
Safeway -0.26% -1.66% -0.69%

Summary

Supervalu beats Safeway on 10 of the 11 factors compared between the two stocks.

About Supervalu

Supervalu Inc. is a wholesale distributor to independent retail customers across the United States. The Company’s segments include Wholesale and Retail. The Company offers a range of advertised brand name and private-label products, including grocery (both perishable and nonperishable), general merchandise and home, health and beauty care, and pharmacy, which are sold through Company-operated and licensed Retail stores to shoppers and through its Wholesale segment to independent retail customers. The Company’s Wholesale segment provides wholesale distribution of products to independent retail customers. Wholesale is organized and operated through two geographic regions: East and West. As of February 27, 2016, the Company conducted its Retail operations through a total of 200 stores primarily organized under five regionally-based retail banners of Cub Foods, Shoppers Food & Pharmacy, Shop ‘n Save, Farm Fresh and Hornbacher’s, as well as two Rainbow and two County Market stores.

About Safeway

Safeway Inc., is an food and drug retail company. The Company owns and operates GroceryWorks.com Operating Company, LLC, an online grocery channel doing business under the names Safeway.com and Vons.com. Blackhawk, a majority-owned subsidiary of Safeway, is a prepaid payment network utilizing proprietary technology to offer gift cards, other prepaid products and payment services. Blackhawk’s payment network supports its three primary constituents: consumers who purchase the products and services Blackhawk offers, content providers who offer branded products that are redeemable for goods and services, and distribution partners who sell the products. Blackhawk’s product offerings include gift cards, prepaid telecom products and prepaid financial services products, including general purpose reloadable cards and Blackhawk’s reload network.

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