Supervalu seen as deeply undervalued
Jun. 28, 2017 3:04 PM• SA Editor Clark Schultz
Shares of Supervalu (NYSE:SVU) are up 4.43% after RBC Capital highlights why the stock was oversold.
RBC's take: "Despite predominantly a wholesaler (only 6% of EBIT is retail), SVU is down 25% since KR earnings and 19% since AMZN/WFM announcement (2nd most in our space). We don't think Amazon plans to directly compete for SVU wholesale customers. Amazon's impact would be related to market share gains at the expense of SVU's retail customers. WFM and Amazon Fresh are very urban, in the most dense population areas, and average 585 people/MSA square mile. This is well above average (357/sq. mile) and SVU's retailer customers (277/sq. mile)."
The firm backs its Outperform rating and price target of $6 (+88% upside potential) on the grocery store stock. An even deeper dive into SuperValu was posted last month on Seeking Alpha by Michael Boyd.
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