Safeway Impresses With Huge Cash Flow

Grocery-store operator Safeway (SWY) opened for trading yesterday (2-26-10) down 4.3%, at 22.50. The shares then proceeded to climb 10% from that level to close at 24.73, a +5.2% gain on the day.

Along with the broad market being down early, some investors may have sold the stock on the headline news that Safeway lost $4.59 per share or $1.609 billion in the fourth quarter 2009.

That massive loss was due to a non-cash, goodwill writedown of $1.818billion, to erase from the balance sheet assets that are not assets. (Goodwill is the premium paid for previous acquisitions, and is an intangible asset). The reason for the stock to so broadly outperform the market today was the big 2009 Free Cash Flow performance, as highlighted by CEO Steve Burd:

Excluding the non-cash goodwill impairment charge, our results were in line with our expectations,” said Steve Burd, Chairman, President and CEO. “Despite very challenging economic conditions, Safeway generated free cash flow of $1.5 billion in 2009. This exceeded our expectations and is the highest annual free cash flow ever achieved by Safeway.

Complete Story »

Investing, Long Term Investment, stock market | admin February 26, 2010

RSS feed for comments on this post.

Smart Stocks Investing

Be Smart in Stocks Investing