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Kroger (KR) Gains As Market Dips: What You Should Know

Zacks Equity Research

In the latest trading session, Kroger (KR) closed at $31.58, marking a +0.19% move from the previous day. This move outpaced the S&P 500's daily loss of 0.92%. Elsewhere, the Dow lost 1.17%, while the tech-heavy Nasdaq lost 0.28%.

Prior to today's trading, shares of the supermarket chain had gained 3.34% over the past month. This has lagged the Retail-Wholesale sector's gain of 18.09% and the S&P 500's gain of 15.69% in that time.

KR will be looking to display strength as it nears its next earnings release. In that report, analysts expect KR to post earnings of $0.56 per share. This would mark a year-over-year decline of 22.22%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $39.99 billion, up 7.36% from the year-ago period.

KR's full-year Zacks Consensus Estimates are calling for earnings of $2.47 per share and revenue of $126.38 billion. These results would represent year-over-year changes of +12.27% and +3.35%, respectively.

Investors should also note any recent changes to analyst estimates for KR. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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. The Zacks Consensus EPS estimate has moved 2.95% higher within the past month. KR is currently a Zacks Rank #2 (Buy).

Valuation is also important, so investors should note that KR has a Forward P/E ratio of 12.78 right now. For comparison, its industry has an average Forward P/E of 11.94, which means KR is trading at a premium to the group.

Also, we should mention that KR has a PEG ratio of 2.62. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. KR's industry had an average PEG ratio of 2.33 as of yesterday's close.

The Retail - Supermarkets industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 14, which puts it in the top 6% 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.

To follow KR in the coming trading sessions, be sure to utilize Zacks.com.


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