What Should You Know About The Kroger Co’s (NYSE:KR) Future?
The Kroger Co’s (NYSE:KR) released its most recent earnings update in February 2018, which signalled that the company endured a slight headwind with earnings declining from US$1.96b to US$1.89b, a change of -3.52%. Below is my commentary, albeit very simple and high-level, on how market analysts perceive Kroger’s earnings growth outlook over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. See our latest analysis for Kroger
Market analysts’ prospects for the upcoming year seems pessimistic, with earnings declining by -7.53%. Over the medium term, earnings are predicted to continue to be below today’s level, with a decline of -3.82% in 2020, eventually reaching US$1.82b in 2021.
While it’s helpful to be aware of the rate of growth year by year relative to today’s figure, it may be more insightful to analyze the rate at which the company is rising or falling every year, on average. The advantage of this method is that we can get a better picture of the direction of Kroger’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 3.56%. This means, we can assume Kroger will grow its earnings by 3.56% every year for the next few years.
Next Steps:
For Kroger, I’ve put together three important aspects you should further research:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is KR worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether KR is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of KR? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
