Has Safeway (SWY) Turned Corner? Analyst Says No

Yesterday Safeway (NYSE: SWY) reported Q4 EPS of $0.94, $0.18 better than the analyst estimate of $0.76 on revenue of $13.77 billion. While the beat looks impressive on paper, analyst Ajay Jain of Cantor Fitzgerald said at least $0.50 of EPS came from a variety of non-operating or questionable sources.

"With what we expect to be an upbeat investor conference in a few weeks and at least the optics of underlying improvement in the business, we acknowledge what could be a growing perception that Safeway has turned the corner operationally due to the Just 4 U rollout," said Jain. "However, the extent of financial engineering and continued reliance on real estate gains in particular (both in relation to earnings and Safeway's internally measured FCF) are not sustainable growth vehicles, in our view."

Cantor Fitzgerald has a Sell rating on Safeway with a price target of $14.00

For an analyst ratings summary and ratings history on SAFEWAY (NYSE: SWY) click here. For more ratings news on SAFEWAY click here.

Shares of SAFEWAY closed at $22.97 yesterday.

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