GIVN Given Imaging Ltd. - Ordinary Shares (MM)

Shares of Safeway (SWY) touched a new 52-week high of $23.96 on Thursday, Feb 21, 2013, following the release of the fourth-quarter results. The 17.6% surge in company’s profit boosted market sentiments as the stock rose 14.11% (or $2.84) during Thursday. The closing price of this food and drug retail stock on Feb 21 was $22.97, which represented a solid year-to-date return of 25.2%.

Drivers that Triggered Momentum

The company’s robust results are driving the bullish momentum of the stock. On Feb 21, Safeway recorded fourth-quarter and full year 2012 results. The company’s fourth-quarter earnings per share (EPS) shot up 58.2% year over year to $1.06, reflecting a beat of 39.5% over the Zacks Consensus Estimate.

Annual EPS climbed 52.3% to $2.27 in 2012, surpassing the corresponding Zacks Consensus Estimate by 12.9%. Safeway also exceeded the higher end of its 2012 EPS guidance. A significant reduction in share count helped the company sail past projections as well as the prior-year levels.

After a setback in the third quarter, Safeway’s top-line witnessed growth. However, sales were negatively impacted by calendar shifts as the fiscal year ended on Dec 29, 2012. Quarterly and annual sales would have come in higher, had it included the entire impact of New Year’s holiday sales. Yet, fourth-quarter and annual sales of $13.8 billion and $44.2 billion, respectively, edged past the corresponding Zacks Consensus Estimates.

Notably, Safeway’s approach to improve identical-store sales on the heels of ‘Just for U’ loyalty program yielded positive results as identical-store sales in the quarter inched up 0.8% on a year-over-year basis. The loyalty program was also a major positive catalyst increasing market share and profitability for the company. The fuel loyalty program was another impetus that improved results. Safeway’s plan to launch ‘Just for U’ in Canada by mid-2013 is another encouraging move.

Given this backdrop, upward revision in 2013 estimates is anticipated. Although the current Zacks Consensus Estimate is pegged at $2.07 for 2013, estimate revision trends over the next few days are expected to reflect bullish sentiments towards Safeway’s performance in the current year.

Currently, the stock carries a Zacks Rank #3 (Hold). Other medical stocks such as ResMed (RMD), Cyberonics (CYBX) and Given Imaging (GIVN), each carrying a Zacks Rank #1 (Strong Buy), are worth considering for short-term investments.

 
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