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Sainsbury (LSE: SBRY.L - news) (LSE: SBRY) impressed the markets on Wednesday, closing up more than 3% after delivering a rosy set of interim results:

• Total (FP.NX - news) sales up 3.7%;
• Like-for-like sales, excluding fuel, up 5.7 %;
• Underlying basic earnings per share (EPS) up 18.6%; and,
• Property value up by £1bn.

But should you add Sainsbury to your shopping basket?

What recession?

According to the latest TNS Worldpanel figures, also hot off the presses on Wednesday, all the major retail chains have seen significant growth over the past 12 weeks, in comparison to the same period last year. So there's plenty of good news to go around.

Sainsbury's main rival, Tesco (LSE: TSCO.L - news) (LSE: TSCO), increased its market share for the first time in nearly two years, to 30.7%. This was attributed mainly to the success of its Clubcard campaign, with customers now earning double points on purchases.

How Sainsbury compares

All of that is useful when putting these results into context, but as with any share, the investment decision comes down to the price and valuation. Here's how the main contenders compare:

Data source: Company REFS

* Compound annual growth in forecasted earnings this year and next.

The EPS data is based on brokers' consensus estimates -- we could debate the extent to which these estimates are reliable, but I think it's reasonable to use them for a first cut at the numbers.

When comparing price/earnings ratios (P/E), some people find it useful to flip the P/E on its head and think about earnings yield instead.

Now we can ask the question: Would I give up half a point of earnings yield in Tesco or Morrison (LSE: MRW), in return for a one-point higher dividend yield at Sainsbury? Obviously this comes down to personal preference, and a true dividend hound will usually take that bird in the hand.

It's not that Sainsbury is making more profit -- it's not -- it's just that it's distributing more of that profit as a dividend. But partly as a result of holding on to more of your profits, both Tesco and Morrison are expected to grow at much juicier rates over the next two years -- 14.1% and 16% per annum, respectively.

Growth projections at Marks & Spencer (LSE: MKS (MKX.TO - news) ) are a bit more cautious, due in part to the company's greater dependence on discretionary spending on clothes.

I like dividends, but I prefer growth. And to compensate for the relatively sluggish forecasts, I'd need to get a very significant discount to the current 338p to before I'd buy Sainsbury. And by 'significant', I mean of the order of 25%, which means a price below 255p, which the shares only briefly touched in the dark days of October 2008.

And even that's on the assumption of everything else being equal, which it rarely is; the events that might bring about a fall of this magnitude would probably change that calculation. Alternatively, there may be reason to take a different view on expected earnings, rather than naïvely accepting the current brokers' consensus figures.

The wild card

There is another reason to hold Sainsbury, though, and that's the possibility of renewed bid for the company. The Qatar Investment Authority still owns 26.1% of the company, following its attempted takeover at 600p in 2007, when, admittedly, the world was a very different place. And now, having cashed in a large chunk of its holdings in Barclays (LSE: BARC.L - news) (LSE: BARC), there is speculation that it will again target Sainsbury.

That speculation is not enough to make me buy, but if I owned it I might be inclined to hold and see how this plays out. As ever, and in the best Foolish tradition, DYOR -- do your own research.