Why SUPERVALU Inc. Could Be Positioned for a Slump (SVU)

This earnings trend telegraphs problems ahead for SVU

Similar to wise buying decisions, exiting certain underperformers at the right time helps maximize portfolio returns. Selling off losers can be difficult, but if both the share price and estimates are falling, it could be time to get rid of the security before more losses hit your portfolio.

One such stock that you may want to consider dropping is SUPERVALU Inc. (SVU), which has witnessed a significant price decline in the past four weeks, and it has seen negative earnings estimate revisions for the current quarter and the current year. A Zacks Rank #4 (Sell) further confirms weakness in SVU.

A key reason for this move has been the negative trend in earnings estimate revisions. For the full year, we have seen two estimates moving down in the past 30 days, compared with no upward revisions. This trend has caused the consensus estimate to trend lower, going from 60 cents a share a month ago to its current level of 42 cents.

Also, for the current quarter, SUPERVALU has seen three downward estimate revisions versus no revisions in the opposite direction, dragging the consensus estimate down to nine cents a share from 16 cents over the past 30 days.

The stock also has seen some pretty dismal trading lately, as the share price has dropped 16.9% in the past month.

SuperValu Inc. Price and Consensus

SuperValu Inc. Price and Consensus | SuperValu Inc. Quote

So it may not be a good decision to keep this stock in your portfolio anymore, at least if you don’t have a long time horizon to wait.

If you are still interested in the Food – Miscellaneous industry, you may instead consider a better-ranked stock – B&G Foods, Inc. (BGS). The stock currently holds a Zacks Rank #2 (Buy) and may be a better selection at this time. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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