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Kroger (KR) to Report Q1 Earnings: Key Factors to Note

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·4 min read
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The Kroger Co. KR is likely to register an increase in the top line when it reports first-quarter fiscal 2022 results on Jun 16, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $44,227 million, indicating an improvement of 7.1% from the prior-year reported figure.

The bottom line of this operator of a supermarket chain is expected to increase year over year. The Zacks Consensus Estimate for first-quarter earnings per share has risen by a penny to $1.28 over the past seven days, which suggests an increase from $1.19 reported in the year-ago period.

The company has a trailing four-quarter earnings surprise of 22.1%, on average. In the last reported quarter, this Cincinnati, OH-based company’s bottom line surpassed the Zacks Consensus Estimate by 24.7%.

Key Factors to Note

Kroger has been making significant investments to enhance product freshness and quality as well as expand digital capabilities and payment solutions. Impressively, it has been introducing new items under its “Our Brands” portfolio. The company has been expanding its Customer Fulfillment Center in an effort to ensure efficient deliveries. Cumulatively, these factors are likely to have favored the company’s first-quarter top-line performance.

Without a doubt, Kroger’s digital business remains one of its key growth drivers. Considering the current scenario, the company has been focusing on a no-contact delivery option, low-contact pickup service and ship-to-home orders. Its ‘Kroger Delivery Now’ service provides customers with food and household staples in 30 minutes. Also, its focus on the margin-rich alternative profit business bodes well.

Clearly, the aforementioned factors instill optimism regarding the results. However, margins remain an area to watch. Supply chain bottlenecks, increased labor and transportation expenses, and higher commodity costs are likely to have weighed on margins. Kroger saw higher product cost inflation in most categories during the fourth quarter of fiscal 2021.

The Kroger Co. Price, Consensus and EPS Surprise

The Kroger Co. Price, Consensus and EPS Surprise
The Kroger Co. Price, Consensus and EPS Surprise

The Kroger Co. price-consensus-eps-surprise-chart | The Kroger Co. Quote

What Does the Zacks Model Unveil?

Our proven model does not conclusively predict an earnings beat for Kroger this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kroger has an Earnings ESP of -0.55% and a Zacks Rank #3.

3 Stocks With the Favorable Combination

Here are three companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:

AutoNation AN currently has an Earnings ESP of +9.38% and a Zacks Rank #1. The company is likely to register an increase in the bottom line when it reports second-quarter 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $5.95 suggests an increase of 23.2% from the year-ago reported number.

AutoNation’s top line is expected to decrease year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $6.87 billion, which indicates decline of 1.6% from the prior-year quarter. AutoNation has a trailing four-quarter earnings surprise of 27.4%, on average.

The Home Depot HD currently has an Earnings ESP of +0.32% and a Zacks Rank #3. The company is expected to register bottom-line growth when it reports second-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings per share of $4.94 suggests growth of 9.1% from the year-ago quarter’s reported figure.

Home Depot’s top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $43.37 billion, indicating an increase of 5.5% from the year-ago quarter. HD has a trailing four-quarter earnings surprise of 7.2%, on average.

Lithia Motors LAD currently has an Earnings ESP of +2.38% and a Zacks Rank #3. The company is likely to register an increase in the bottom line when it reports second-quarter 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $11.85 suggests an increase of 6.6% from the year-ago reported number.

Lithia Motors’ top line is expected to increase year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $7.49 billion, which indicates an improvement of 24.7% from the prior-year quarter. LAD has a trailing four-quarter earnings surprise of 30.5%, on average.

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