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Kroger Crafts 52-Week High Yet Again

Zacks Equity Research

The momentum gathered from the better-than-expected fourth-quarter fiscal 2012 results on the back of its customer-centric business model, facilitated the shares of The Kroger Company (KR) to attain a new 52-week high for the 3rd consecutive week.

After hitting a high of $31.41 on Mar 13 and $32.10 on Mar 20, shares of Kroger further soared to a new high of $33.25 yesterday. This Zacks Rank #2 (Buy) stock eventually closed at $33.10, recording a healthy year-to-date return of roughly 26.2%. The company currently trades at a forward P/E of 11.97x, a 14.6% discount to the peer group average of 14.01x.

Kroger’s dominant position among the nation’s largest grocery retailers enables it to sustain growth in its top and bottom lines, expand its store base, and boost its market share. Moreover, Kroger’s Customer 1st strategy provides a strong value proposition to consumers. The company’s value offerings further facilitate it to retain customers and in turn generate identical supermarket sales growth.

These measures helped the company post stronger-than-anticipated fourth-quarter fiscal 2012 results. Kroger declared impressive results on Mar 7, 2013, wherein earnings of 88 cents a share beat the Zacks Consensus Estimate of 70 cents, and surged from 50 cents earned in the prior-year quarter. In the last 4 quarters, the company has outpaced the Zacks Consensus Estimate by an average of 11.3%.

Total sales (including fuel center sales) climbed 12.8% to $24,153.1 million from the prior-year quarter, and came ahead of the Zacks Consensus Estimate of $24,053 million.

Kroger, which faces stiff competition from Wal-Mart Stores Inc. (WMT), now envisions fiscal 2013 earnings between $2.71 and $2.79 per share, reflecting year-over-year growth of 8% to 11%, which is equivalent to the company’s long-term rate.

The Zacks Consensus Estimate for fiscal 2013 rose 5.3% to $2.76 per share over the last 30 days. For fiscal 2014, the Zacks Consensus Estimate advanced 4.9% over the same timeframe to $3.00 per share.     

Alongside, companies like Target Corporation (TGT) and Costco Wholesale Corporation (COST) crafted new 52-week highs on Wednesday.

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