Is Supervalu (SVU) a Good Buy?
by Houghton and Atkeson 02/24/09
Options in Supervalu (SVU), are running four times usual, and trading appears bullish.
With the stock trading at $17, market participants appear to be selling the March 15 Puts (SVUOC) and buying the July 25 Calls (SVUGE). Investors received 37 cents for the puts 6,000 times and paid 35 cents for the calls 1,000 times.
In the November crash, the stock went to $8.59. Supervalu was a victim of investors concern about companies with debt. Debt per share ex-cash is $37. The company goes ex-div on Feb. 26. The yield is currently 4%.
Earnings are scheduled for April 13, after the March expiration, and estimated to be $2.79 per share. The stock is 50% off 52-week high and almost 65% off its lifetime high.
Is Supervalu indeed a super value?
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