NEW YORK (TheStreet) -- Shares of SuperValu Inc (SVU) were rallying, up 6.2% to $8.65 in midday trading Wednesday, after the company released its latest earnings results yesterday and announced that it was exploring a spin-off of Save-A-Lot.

The company said it may separate its discount grocery chain Save-A-Lot into a publicly traded company to help growth.

Save-A-Lot has seen faster growth in the past seven quarters, while its grocery wholesale and food retail businesses have slowed, according to Reuters.

Save-A-Lot has more than 1,300 stores across the U.S., of which 430 are corporate stores and about 900 are licensed, Reuters noted.

In its latest quarter ended June 20, the company reported better than expected financial results that beat analysts' estimates on both the top and bottom line. 

SuperValuearned 23 cents per share on revenue of $5.41 billion for the fiscal first quarter.

Analysts on average had expected a profit of 20 cents per share with sales of $5.39 billion for the period, according to Thomson Reuters data.

This morning, analysts at Morgan Stanley upgraded SuperValu to "equal weight" from "underweight" with an unchanged $9 price target.

SuperValu is a wholesale distributor to independent retail customers that leverages its distribution operations.

It operates under three segments including independent business, Save-A-Lot, and retail food.

Separately, TheStreet Ratings team rates SUPERVALU INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate SUPERVALU INC (SVU) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."

You can view the full analysis from the report here: SVU Ratings Report

SVU data by YCharts

Image placeholder title