Safeway Inc. Stock Upgraded (SWY)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Safeway (NYSE:SWY) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its increase in net income, notable return on equity, attractive valuation levels and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

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Highlights from the ratings report include:

• The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Food & Staples Retailing industry average. The net income increased by 20.6% when compared to the same quarter one year prior, going from $130.10 million to $156.90 million.
• Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Food & Staples Retailing industry and the overall market, SAFEWAY INC's return on equity exceeds that of both the industry average and the S&P 500.
• SAFEWAY INC has improved earnings per share by 18.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SAFEWAY INC reported lower earnings of $1.53 versus $1.57 in the prior year. This year, the market expects an improvement in earnings ($2.00 versus $1.53).
• SWY, with its decline in revenue, slightly underperformed the industry average of 6.1%. Since the same quarter one year prior, revenues slightly dropped by 0.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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Safeway Inc., together with its subsidiaries, operates as a food and drug retailer in North America. The company has a P/E ratio of 10.1, below the S&P 500 P/E ratio of 17.7. Safeway has a market cap of $4.51 billion and is part of the services sector and retail industry. Shares are up 4.1% year to date as of the close of trading on Thursday.

You can view the full Safeway Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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For more information on Safeway Inc. click any of the following:

• Safeway Inc. Stock Price

• Safeway Inc. Analyst Ratings

• Safeway Inc. Key Stats & Profile

• Safeway Inc. Earnings

• Safeway Inc. Ratio Comparison

• Safeway Inc. Growth Rates

• Safeway Inc. Balance Sheet

• Safeway Inc. Cash Flow

• Safeway Inc. Income Statement