Winn-Dixie Earnings Surprise

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I mentioned last Friday that I was hoping to do some analysis on Winn-Dixie Stores (WINN) once they released their second quarter 10-Q. Looks like they beat analyst earnings expectations, which while not a buy signal in and of itself in my book is still a positive because it means they weren't losing money.

I'm hoping to write up some formal analysis and a recommendation on the stock either tonight or tomorrow night. I haven't looked at their 10-Q yet aside from reading the headlines, but I am slightly optimistic that their balance sheet has improved. The roughly 2.5% move up today also likely means that they're still at the P/B ratio I discussed in a recent post.

I'm also hoping to at some point dive in to the 10-Q The Pantry (PTRY) released February 2nd. My apologies for not being more on top of that. It seems that they went below analyst expectations with their loss, and I'll take a look to make sure that this stock still makes sense. Part of the way I pitched it was conditional upon them being able to turn a profit soon, and there's a certain point where your patience has to run out. It's not out of the realm of possibilities that upon further analysis I'll close my position on my motley fool profile.

In case you haven't seen it, a more formalized version of the VIX pitch I put up on my blog here got published on Seeking Alpha today. I think it turned out pretty well, so if you haven't read it yet you should take a look.

Analysis On Winn-Dixie Stores

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Although I'm waiting until they release their earnings next week, one stock I've been looking in to and have gone long on for my motley fool account is Winn-Dixie Stores Inc. (WINN), the southern grocer. I'm waiting for the earnings announcement so I can go in to more detail for my analysis rather than simply guesstimating what is going to happen. That doesn't seem prudent based on how close their earnings announcement is.

But here's a little preview of some numbers I ran off their Q1 10-Q:

As you can see, even after discounting intangibles and basically anything that you can't put your hands on, they still have a P/B of less than one. I'm not quite sure how I feel about their Property Plant and Equipment (PPE), since it appears they only own 8 stores and 1 distribution center, but I guess trading below hard assets is all I can really ask for.

If you ask me this seems very very cheap, especially since they have no long term debt, but I'll be interested to see how their Q2 earnings come out. Mean analyst estimate is a loss of $0.16, with a high estimate of -$0.09 and a low estimate of -$0.27. If they surprise on the upside it might push them past this price to tangible book ratio of one, but I think that's a risk you have to be willing to take.