SUPERVALU Inc. (NYSE: SVU ) is set to report third-quarter fiscal 2015 results on Jan 7. Last quarter, the company posted in-line results. Let’s see how things are shaping up for this announcement.

Factors to Consider

We are encouraged by SUPERVALU’s turnaround initiatives which helped counter the persistent weakness and deliver healthy first-half fiscal 2015 results. The trend may continue in the second half as well.

Save-a-Lot stores remain SUPERVALU’s major growth driver and it is in the process of revamping these stores. The company is focusing on the ‘fresh from farm’ department and “saw cut” program at Save-a-Lot outlets which are expected to boost third-quarter top line.

The company embarked on a fair price promotion strategy (lower prices to competitive level) in fiscal 2013. Although the strategy has been quite well received it has been putting pressure on margins.

Moreover, SUPERVALU is facing intense competition from and losing market share to other supermarket giants. This may affect the company’s top line in the to-be-reported quarter.

Earnings Whispers?

Our proven model does not conclusively show that SUPERVALU is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimate. However, that is not the case here due to the following factors:

Zacks ESP: ESP for SUPERVALU is 0.00% as both the Most Accurate Estimate and Zacks Consensus Estimates stand at 14 cents..

Zacks Rank: SUPERVALU’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Stocks to Consider

Here are some other companies that can be considered as our model shows that they have the right combination of elements to post an earnings beat this quarter:

DeVry Education Group Inc. (NYSE: DV ) with an Earnings ESP of +1.30% and a Zacks Rank #3.

PulteGroup, Inc. (NYSE: PHM ) with an Earnings ESP of +2.44% and a Zacks Rank #2 (Buy).

Armstrong World Industries, Inc. (NYSE: AWI ) with an Earnings ESP of +10.71% and a Zacks Rank #2.

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SUPERVALU INC (NYSE: SVU ): Free Stock Analysis Report