The Kroger Co. Stock Earnings Preview
Warrior Trading | Jun 16, 2016 08:22AM ET
The Kroger Co. (NYSE:KR)
The Kroger Co. is set to report 2016 first quarter earnings this morning, Thursday June 16, 2016 before the market opens, and the street expects earnings of $.69 on revenues of $34.88 billion.
h3 Analyst Expectations/h3Analysts at Deutsche Bank (DE:DBKGn) had the following comments on KR back on June 10 as a preview for tomorrow morning’s report:
h3 About The Kroger Co./h3Kroger (KR) to Report 1Q16 Earnings on Thursday, 6/16; Call at 10AM ET For the 16-week 1Q ended 5/21, we are forecasting EPS of $0.67, which is $0.02 below Consensus. Our forecast is based on non-fuel ID’s of +2.5%, in line with Consensus. Investors appear to be somewhat cautious ahead of earnings on concerns that non-fuel ID’s may miss expectations for the second straight quarter due to 1) continued food deflation and 2) disappointing grocery sales from leading retailers, including WMT, TGT, and COST. KR shares declined sharply in early March after 4Q non-fuel ID’s fell short of guidance for the first time in several quarters due to less inflation, a calendar shift, and weather-related headwinds. After outperforming the market in 2015 (+30.3% vs. -0.7% for S&P), KR shares have underperformed YTD (-12.6% vs. +3.5% S&P). Strong tonnage growth continues and indicates that KR’s competitive positioning remains very strong, and we believe KR’s long-term growth prospects remain robust. KR’s valuation at 7.3x our FY17E EV/EBITDA looks very reasonable relative to other major US food retailers, including TGT (6.8x), WMT (8.0x), COST (12.2x), WFM (8.2x). Thus, we see room for multiple expansion should KR continue to execute on its strategy, deliver consistent tonnage growth and EPS in the +8-11% range. We reiterate our Buy rating. KR preview at dbab 6-10. Reports tomorrow before the open.
The Kroger Co. (Kroger), incorporated on April 3, 1902, operates retail food and drug stores, multi-department stores, jewelry stores and convenience stores across the United States. The Company also manufactures and processes food for sale in its supermarkets. The Company operates through retail operations segment. The Company operates, either directly or through its subsidiaries, approximately 2,778 retail food stores under a range of local banner names, approximately 1,387 of which have fuel centers. Approximately 42% of these supermarkets are operated in the Company-owned facilities, including a range of Company-owned buildings on leased land. Its supermarkets are operated under combination food and drug stores (combo stores), multi-department stores, marketplace stores or price impact warehouses. Its corporate brand products are primarily produced and sold in approximately three tiers. Private Selection is the brand designed to beat the gourmet or upscale brands. The banner brand includes Kroger, Ralphs, Fred Meyer and King Soopers. The Company’s other brands also include Simple Truth and Simple Truth Organic.
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