Is This Stock a SUPERVALU at Last?

Long-suffering SUPERVALU (NYS: SVU) shareholders got a bit of relief this morning, when the red-tinted supermarket chain beat fourth-quarter estimates -- but the real treat came with boosted forward guidance that clocked in well above expectations. That reversed the stock's losses for the week, but SUPERVALU is a long way from climbing out of the hole it's dug for itself over the past year. This could be the shot heard round the market, signaling the start of a successful growth period for the company's stock. Let's look at the numbers to find out whether this is your opportunity.

Just the facts
SUPERVALU posted a loss for the fourth quarter and for the full year, as it had in the 2011 fiscal year. However, goodwill and intangible asset impairment charges took a big bite out of the company's profit, which came in at $265 million (or $1.25 per share) without the charges. Similar balance-sheet gimmickry cropped up in the 2011 fiscal year, which would have seen $296 million in earnings without a bundle of write-offs.

Operating cash flow topped $1 billion for each of the past two years, but the most recent report saw a slight drop, from $1.2 billion to $1.1 billion. Higher capital expenditures easily account for the discrepancy, which isn't a bad thing -- bigger, better, and more supermarkets should be a net positive for SUPERVALU over the long run.

Here are the basic trends in SUPERVALU's top and bottom lines over the past few quarters:


Sources: Morningstar and SUPERVALU earnings release.

Sources: Morningstar and SUPERVALU earnings release.

Where do we go from here?
It's worth noting that Foolish special-situations analyst Jim Royal is bullish on SUPERVALU and has remained so through its doldrums. He notes that SUPERVALU trails both Kroger (NYS: KR) and Safeway (NYS: SWY) in its forward earnings multiple despite remaining competitive with both in operating margins. The stock's dividend -- now at 6.8% even after the pop -- far outpaces those grocers as well. With a forward multiple in the single digits, SUPERVALU is also far less costly than high-flying Whole Foods Market (NYS: WFM) . Now might be a good time to check out this stock to see whether it's finally ripe.

Don't forget to add SUPERVALU to your Watchlist for all the news that's fit for Fools. If you're looking for another great stock in this sector that might have far better potential, take a look at The Motley Fool's free report on our top stock for 2012. You'll get everything you need to know about one company with tons of room to run in a region it has almost entirely to itself. Claim your free report now.

At the time thisarticle was published Fool contributorAlex Planesholds no financial position in any company mentioned here. Add him onGoogle+or follow him on Twitter,@TMFBiggles, for more news and insights. The Motley Fool owns shares of SUPERVALU.Motley Fool newsletter serviceshave recommended buying shares of Whole Foods Market and buying calls on SUPERVALU. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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