Barclays on U.S. Food and Drug Retailing: Supermarkets as LBO Candidates (KR, SWY & SVU)
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Rating Summary:
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Today's Overall Ratings:
Up: 11 | Down: 26 | New: 12
Rating Summary:
7 Buy, 6 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 26 | New: 12
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Barclays on U.S. Food and Drug Retailing: Supermarkets as LBO Candidates
Analyst, Meredith Adler, covers Kroger (NYSE: KR)(EW-rated), Safeways (NYSE: SWY) and Supervalu (NYSE: SVU)(EW-rated) and is reviewing to see if these Supermarket stocks may be potential leveraged Buy-out (LBO) candidates.
Adler said, "All the food retailers have at least some of the key factors, but we believe KR and even SWY would be difficult to finance given their size. SVU's low valuation and small market capitalization make it the most interesting candidate, in our view, and if a transaction could be financed, our analysis shows a return of 40%+ to the buyer even if a premium of 50% is paid to shareholders, based on our current earnings forecast. However, financing is an issue, since the company has debt maturities totaling about $2.2 billion during fiscal 2015-2017."
However, she did note that investors haven't been pleased on specific issues like lack of guidance, fighting price cuts vs. competitors, and other cost-cutting issues...Although, on the positive side, 90% of Supervalu stores are new or have been remodeled in the past 10 years.
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Analyst, Meredith Adler, covers Kroger (NYSE: KR)(EW-rated), Safeways (NYSE: SWY) and Supervalu (NYSE: SVU)(EW-rated) and is reviewing to see if these Supermarket stocks may be potential leveraged Buy-out (LBO) candidates.
Adler said, "All the food retailers have at least some of the key factors, but we believe KR and even SWY would be difficult to finance given their size. SVU's low valuation and small market capitalization make it the most interesting candidate, in our view, and if a transaction could be financed, our analysis shows a return of 40%+ to the buyer even if a premium of 50% is paid to shareholders, based on our current earnings forecast. However, financing is an issue, since the company has debt maturities totaling about $2.2 billion during fiscal 2015-2017."
However, she did note that investors haven't been pleased on specific issues like lack of guidance, fighting price cuts vs. competitors, and other cost-cutting issues...Although, on the positive side, 90% of Supervalu stores are new or have been remodeled in the past 10 years.
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