Kroger’s Stock Gains Momentum with Impressive Earnings Report
A Review of Recent Performance and Future Projections
Cincinnati, Ohio-based The Kroger Co. (KR) is a significant player in the food and drug retail sector. The company operates various formats, including combination food and drug stores, multi-department stores, marketplace outlets, and price-impact warehouses. With a market capitalization of $43.3 billion, Kroger ranks among the largest food retailers globally.
Over the past year, Kroger’s performance has shown a distinct shift. Despite trailing behind the market previously, the company has excelled in 2024. KR stock has risen by 30.8% year-to-date and 32.4% over the previous year. In comparison, the S&P 500 Index ($SPX) has increased by 24.3% year-to-date and 35.8% over the last 52 weeks.
Comparatively, KR stock has outperformed the Consumer Staples Select Sector SPDR Fund’s (XLP) gains of 10.5% in 2024 and 15.5% over the past year.
Kroger’s stock jumped 7.2% following the release of its Q2 earnings on September 12. This surge occurred despite a marginal increase in sales to $33.9 billion, which fell short of Wall Street’s expectations. The adjusted earnings per share (EPS) dipped slightly to $0.93. However, the company’s improvement in Generally Accepted Accounting Principles (GAAP) profitability, with net income rising to $466 million from a loss of $180 million last year, piqued investor interest. This turnaround was fueled partly by the absence of a previous year’s $1.4 billion charge related to opioid settlements.
Looking ahead to the current fiscal year ending in January 2025, analysts project a 6.3% decline in adjusted EPS to $4.46. Nonetheless, Kroger has a strong history of surprising analysts with positive earnings sesults, having exceeded Wall Street’s bottom-line estimates in each of the past four quarters.
Kroger holds a consensus “Moderate Buy” rating among analysts. Out of 18 covering the stock, 10 recommend a “Strong Buy,” while eight advise to “Hold.”
On October 9, Telsey Advisory Group analyst Joseph Feldman reiterated a “Buy” rating on KR with a price target of $62.
As of the latest updates, Kroger is trading slightly above its average price target of $59.61. The highest target on the Street is set at $72, indicating a potential upside of 20.4% from current trading levels.
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On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data provided herein are for informational purposes only. For more information, please review the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
