What to Expect When Kroger Reports Thursday Morning

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Kroger Co. (NYSE: KR) is scheduled to release its fiscal second-quarter financial results before the markets open on Thursday. The consensus estimates are calling for $0.41 in earnings per share (EPS) and $28.36 billion in revenue. The same period of last year reportedly had $0.41 in EPS and $27.87 billion in revenue.

Kroger has struggled somewhat lately. Its most recently reported quarterly revenue was essentially flat. For 2019, the number was $37.3 billion. In the same quarter of 2018, revenue was $37.7 billion. Operating profit dropped between the two years. In that quarter, it was $901 million. A year ago, the figure was $1.03 billion.

During the fiscal first quarter, total revenues decreased about 0.5%, and this was due to the sale of Kroger’s convenience store business unit. Also at the time, total sales, excluding fuel and the effect of selling the unit, increased 2% from the same period last year.

Kroger’s strength is that it sells only one category of products. Americans associate food shopping with the Kroger brand. Its top spot in the grocery business is also a weakness. Retailers such as Amazon and Walmart want to take Kroger’s position.

Excluding Wednesday’s move, Kroger has underperformed the broad markets, with its stock down about 6% year to date. In the past 52 weeks, the stock is down 20%.

A few analysts weighed in on Kroger ahead of the report:

  • BMO Capital Markets has a Market Perform rating and a $26 target.
  • Guggenheim has a Buy rating with a $26 price target.
  • Pivotal Research has a Buy rating with a $26 price target.
  • Telsey Advisory Group rates it as Market Perform with a $27 target.
  • Merrill Lynch has a Buy rating with a $30 price target.

Shares of Kroger traded down about 2% on Wednesday at $25.25, in a 52-week range of $20.70 to $31.98. The consensus price target is $26.37.

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