Smart & Final Inc.’s bottom line is looking a lot smarter these days, but its stock price is still floundering.

The warehouse grocery chain was toiling under a heavy debt load for some time, which led to an $8.7 million loss in 1998. But last year, Ross Roeder, the new chairman and chief executive, stepped in and began cutting costs, restructuring and issuing $60 million in new stock that helped reduce the Commerce-based company’s debt.

With the new stock offering, Groupe Casino Guichard-Perrachon, France’s largest supermarket chain, which owned 56 percent of Smart & Final’s stock, became an even bigger stakeholder. It now owns 60 percent of the company’s stock.

Last year, there were rumors that Groupe Casino might acquire all of Smart & Final. But that has not taken place, and analysts aren’t sure what the French company’s plans are for the grocery chain.

Meanwhile, Smart & Final, which operates 219 stores in seven states, is a considerably healthier company than it was a couple years ago.

“Our company is doing well. Our same-store sales are up 7.2 percent for the second quarter this year over last year,” Lynch said. “We had a tough year in 1997 and 1998, losing money in 1998. But it turned around in 1999 and we became profitable.”

Smart & Final reported net income for the fiscal second quarter ended June 18 of $3.2 million (11 cents a share), compared with $1.3 million (6 cents a share) for the like period a year ago. Revenue was $443 million vs. $419 million.

But while revenue and income are up, the stock price is still depressed. It has been trading at bargain-basement rates ever since it took a disastrous slide in mid-1998 to less than $10. Last week it was bouncing around between $6.50 and $7 a share, after a 52-week high of $10.25 on Oct. 1, 1999, and a 52-week low of $5.50 on Feb. 18.

“Part of what is going on is that it is a thinly traded stock,” said Charles Lemos, an analyst with Deutsche Banc Alex. Brown. “The company is not out of the woods completely, but Mr. Roeder and Mr. Lynch are doing an admirable job of turning things around The prior management was more liberal with their credit lines and had built up huge accounts receivables.”

In fact, Smart & Final is so thinly traded that the only analysts following the company are Lemos and his associate Jonathan Ziegler at Deutsche Bank Alex. Brown. They recently raised their earnings estimate on the company for this fiscal year from 35 cents a share to 37 cents, and from 55 cents for next fiscal year to 59 cents.

Still, their recommendation on the stock remains “market perform,” meaning they think it will do no better or worse than the overall market.

Lemos notes that the company must do a better job of competing with the larger chains before it emerges as a success story.

“It really does have to distinguish itself more from a Costco or a supermarket,” Lemos said. “Right now it is in a recovery mode. While we raised our estimate of the stock, we’re cautious. It’s too early to tell whether the company has completely turned the corner yet.”

Smart & Final’s main competitors are other major warehouse-style chains such as Wal-Mart Stores Inc.’s Sam’s Clubs and Costco Cos.

Smart & Final tries to be different from its competitors by operating relatively small stores that average about 16,700 square feet. The chain sells bulk-size groceries, paper products, cleaning supplies and other goods primarily to restaurants, caterers, clubs and small businesses. But individuals can also shop there without paying a membership fee.

Lemos noted that the company is improving sales by advertising more, introducing new products and offering a better mix of goods. The company is also revamping its fresh-food selection in the meat and produce departments, a concept it has been testing in 42 stores. It expects to roll out the programs across its entire network of stores soon.

In addition, the company plans to open eight to 10 new stores this year, Lynch said. Earlier this year, the grocery chain opened an outlet in Pacific Beach, Calif. Major remodels were also completed in two large Los Angeles-area stores this spring.