Ohio-based The Kroger Co. (KR) is a food and drug retailer that operates combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. Valued at a market cap of $44.4 billion, the company also operates fine jewelry stores under brands like Fred Meyer Jewelers and Littman Jewelers.
Companies valued at over $10 billion are typically classified as “large-cap stocks,” and Kroger fits the label perfectly. The retail giant operates more than 2,750 grocery retail stores under 28 different names across 35 states and is renowned for its food freshness, low prices, and innovation.
KR has marginally declined from its52-week high of $63.59, achieved on Dec. 12. Shares of this grocery store operator have gained 14.7% over the past three months, significantly outpacing the broader Consumer Staples Select Sector SPDR Fund’s (XLP) 1.3% decline over the same time frame.
Moreover, in the longer term, KR has rallied almost 43.1% over the past 52 weeks, significantly outperforming XLP’s 15.8% returns. Shares of KR are up 38.5% on a YTD basis, massively surpassing XLP’s 14.2% gains over the same time frame.
To confirm its bullish trend, KR has been trading above its 200-day moving average since mid-February and has remained above its 50-day moving average since mid-September.
On Dec. 10, KR’s proposed acquisition of Albertsons Companies, Inc. (ACI) was officially denied after federal judges ruled that the merger would violate consumer protection laws and reduce competition. However, because Albertsons was seen as more reliant on the now-failed acquisition, market sentiments shifted in favor of Kroger and led to a 5.1% rise in KR’s stock price.
On Dec. 5, shares of KR jumped 1.3% after its mixed Q3 earnings release. The company’s adjusted earnings rose 3.2% annually to $0.98 per share and met the consensus estimates. But, on the other hand, its revenue declined by 1% to $33.63 billion and missed the forecasted figure by 1.8%. The revenue decrease can be primarily attributed to lower fuel sales and the sale of Kroger Specialty Pharmacy.
KR’s earnings beat, coupled with a focus on strategic innovations like RFID tags and generative AI tools, might have boosted investor confidence.
Yet, KR has lagged behind its rival, Walmart Inc. (WMT), which rallied 86.5% over the past 52 weeks and nearly 79.1% on a YTD basis.
Given KR’s recent outperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 18 analysts covering it. As of this writing, the stock is trading slightly above its mean price target of $63.28.
