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Is Kroger On Track To Beat Earnings Expectations Again?

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Kroger, one of the world’s largest food retailers, is expected to report its fiscal second-quarter earnings of $0.64 per share, which represents a year-over-year decline of over 12% from $0.73 per share seen in the same period a year ago.

The retailer, which operates over 2,500 supermarkets in the U.S., would post revenue of 30.4 billion, down about -0.3% year on year.

However, as evidenced by its last four earnings reports, the supermarket chain is known for beating earnings estimates. In the last four quarters, on average, the company has beaten earnings estimates over 21%.

Kroger Company will report earnings for the fiscal quarter ending July 2021 on Friday, September 10 before the market open. Friday’s better-than-expected results could help the stock hit new all-time highs.

Kroger shares have surged over 45% so far this year. The stock closed 1.39% lower at $46.65 on Friday.

Analyst Comments

Kroger (KR) is one of the largest conventional food retailers, with competitive advantages including leading scale, an advanced customer data science platform, and ramping digital capabilities. 2020 was a historically strong year for KR driven by COVID-19 uplifts, but KR’s share gains are already normalizing we anticipate an industry sales slowdown in 2021-2022 that is underappreciated in Street estimates,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“Meanwhile we model EBIT margins to return to pre-COVID levels by 2022 as normalizing promotional activity and e-comm pull-forward pressure margins. Longer-term we continue to struggle to model a path to sustainable EBIT growth and margin stabilization.”

Kroger Stock Price Forecast

Fifteen analysts who offered stock ratings for Kroger in the last three months forecast the average price in 12 months of $38.71 with a high forecast of $46.00 and a low forecast of $31.00.

The average price target represents a -17.02% change from the last price of $46.65. From those 15 analysts, two rated “Buy”, ten rated “Hold” while three rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $31 with a high of $50 under a bull scenario and $16 under the worst-case scenario. The firm gave an “Underweight” rating on the food retailer’s stock.

Several other analysts have also updated their stock outlook. JP Morgan raised the target price to $40 from $36. Deutsche Bank lifted the price target to $42 from $41. Guggenheim upped the target price to $41 from $37.

Check out FX Empire’s earnings calendar

This article was originally posted on FX Empire