Cincinnati, 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 $42.5 billion, the company also operates fine jewelry stores under names like Fred Meyer Jewelers and Littman Jewelers. It is expected to announce its fiscal Q4 earnings results on Thursday, Mar. 6.
Prior to this event, analysts expect the food retail company to report a profit of $1.10 per share, down 17.9% from $1.34 per share in the year-ago quarter. The company has a promising earnings surprise history. It has beaten or met Wall Street's earnings estimates in all of the last four quarters. Its profit of $0.98 per share in the previous quarter met the consensus estimates.
For fiscal 2024, analysts project Kroger to report an EPS of $4.44, down 6.7% from a profit of $4.76 in fiscal 2023. Nonetheless, EPS is expected to rebound in fiscal 2025, growing by 7% year-over-year to $4.75.
Shares of Kroger have rallied 30.6% over the past 52 weeks, outpacing both the S&P 500 Index's ($SPX) 22.9% rise and the Consumer Staples Select Sector SPDR Fund’s (XLP) 10.2% return over the same time frame.
On Dec. 5, shares of KR soared 1.3% after its Q3 earnings release. The company’s adjusted earnings improved 3.2% annually to $0.98 per share and met the consensus estimates. However, the sale of Kroger Specialty Pharmacy during the quarter and lower fuel sales resulted in a 1% decline in revenues to $33.6 billion, which fell short of Wall Street estimates by 1.8%. The sale of Kroger Specialty Pharmacy reduced total company revenues by approximately $340 million.
Nonetheless, robust growth in KR’s pharmacy and digital sales, coupled with its focus on strategic innovations like RFID tags and generative AI tools, might have bolstered investor confidence and led to its upward price movement.
Wall Street analysts are moderately optimistic about Kroger’s stock, with a "Moderate Buy" rating overall. Among 19 analysts covering the stock, 10 recommend "Strong Buy," and nine suggest “Hold.”
The average price target for KR is $65.67, which indicates an 8.6% potential upside from the current levels.
