Why Smart & Final Stores, Inc. Stock Jumped Today

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What happened

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Shares of food retailer Smart & Final Stores (NYSE: SFS) jumped as much as 19.8% on Wednesday following the company's second-quarter earnings release. As of 12:54 p.m. EDT, the stock was up 12.3%.

So what

For the second quarter, Smart & Final reported adjusted EPS of $0.14 on revenue of $1.08 billion.  While adjusted EPS was slightly below the consensus analyst estimate for $0.16, sales were in line with expectations.

Investors likely had low expectations going into Smart & Final's second-quarter earnings report. Shares were down 44% year to date before Smart & Final reported second-quarter results. Even after the stock's rise today, shares are down well over 30% since the beginning of the year.

Investors may be optimistic because of Smart & Final's rebound in its important comparable-store sales metric. Sales at comparable stores in Q1 were down 2.5% year over year, but increased 1.3% in Q2.

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Smart & Final CEO David Hirz explained the key metric's reversal: "The second quarter marked a return to positive comparable store sales growth, reflecting the expected lessening of pressures from deflation and growth-related sales cannibalization, as well as from customer growth attributable to our strong competitive position."

Now what

Going forward, Hirz said Smart & Final expected sales growth to continue, driven by "the maturation of new stores opened over the past two years, as well as marketing and promotional initiatives aimed at increasing store traffic and building basket size."

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Daniel Sparks has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.