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Kroger (KR) Gains But Lags Market: What You Should Know

Zacks Equity Research

Kroger (KR) closed the most recent trading day at $24.83, moving +0.69% from the previous trading session. The stock lagged the S&P 500's daily gain of 1.3%. Elsewhere, the Dow gained 1.41%, while the tech-heavy Nasdaq added 1.75%.

Heading into today, shares of the supermarket chain had gained 3.18% over the past month, outpacing the Retail-Wholesale sector's gain of 3.12% and the S&P 500's gain of 0.46% in that time.

Wall Street will be looking for positivity from KR as it approaches its next earnings report date. This is expected to be September 12, 2019. The company is expected to report EPS of $0.42, up 2.44% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $28.42 billion, up 1.98% from the prior-year quarter.

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.

Any recent changes to analyst estimates for KR should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. 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 11.34. For comparison, its industry has an average Forward P/E of 13.38, which means KR is trading at a discount to the group.

We can also see that KR currently has a PEG ratio of 1.75. 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. The Retail - Supermarkets was holding an average PEG ratio of 2.15 at yesterday's closing price.

The Retail - Supermarkets industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 90, which puts it in the top 36% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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