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Kroger (KR) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

In the latest trading session, Kroger (KR) closed at $21.16, marking a -1.26% move from the previous day. This change lagged the S&P 500's 1.09% loss on the day. At the same time, the Dow lost 1.23%, and the tech-heavy Nasdaq lost 1.19%.

Coming into today, shares of the supermarket chain had lost 0.05% in the past month. In that same time, the Retail-Wholesale sector gained 2.21%, while the S&P 500 gained 2.62%.

Investors will be hoping for strength from KR as it approaches its next earnings release. In that report, analysts expect KR to post earnings of $0.71 per share. This would mark year-over-year growth of 73.17%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $28.42 billion, up 1.98% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.17 per share and revenue of $122.88 billion. These totals would mark changes of +2.84% and +1.41%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for KR. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.1% lower. KR is currently sporting a Zacks Rank of #4 (Sell).

In terms of valuation, KR is currently trading at a Forward P/E ratio of 9.86. Its industry sports an average Forward P/E of 13.55, so we one might conclude that KR is trading at a discount comparatively.

We can also see that KR currently has a PEG ratio of 1.52. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Retail - Supermarkets stocks are, on average, holding a PEG ratio of 1.75 based on yesterday's closing prices.

The Retail - Supermarkets industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 100, putting it in the top 40% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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