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Kroger (KR) Q4 Earnings Beat Estimates, Identical Sales Up Y/Y
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The Kroger Co. (KR - Free Report) came up with fourth-quarter fiscal 2022 results, wherein the top and bottom lines not only came ahead of the Zacks Consensus Estimate but also improved year over year. The company also registered growth in identical sales without fuel. Better execution and the sustained demand for food resulted in a stronger-than-anticipated quarter.
This Cincinnati, Ohio-based company has been making investments to enhance product freshness and quality and expand digital capabilities. Impressively, Kroger has been introducing new items under its “Our Brands” portfolio.
Let’s Introspect
Kroger posted adjusted earnings of 99 cents a share, which surpassed the Zacks Consensus Estimate of 90 cents and increased from the 91 cents reported in the prior-year quarter.
Total sales of $34,823 million came ahead of the Zacks Consensus Estimate of $34,781 million. Markedly, the metric rose from the $33,048 million reported in the year-ago period. Excluding fuel, sales rose 5.9% from the year-ago period. We note that identical sales, without fuel, jumped 6.2%. Our Brands’ identical sales rose 10.1%, while digital sales grew 12%.
We note that the gross margin was 21.8% of sales. The FIFO gross margin rate, excluding fuel, contracted 1 basis point compared to the same period last year. The adjusted FIFO operating profit came in at $1,274 million, up from the $1,014 million reported in the year-ago period.
Kroger ended the quarter with cash of $249 million, total debt of $13,378 million and shareowners’ equity of $10,014 million. Net total debt increased by $945 million over the last four quarters. Management estimates capital expenditures in the band of $3.4-$3.6 billion and expects to generate free cash flow between $2.3 billion and $2.5 billion in fiscal 2023.
2023 View
Management envisions identical sales, without fuel, to be up 1% to 2% in fiscal 2023, with underlying growth of 2.5% to 3.5% after adjusting for the effect of Express Scripts. The company anticipates the adjusted FIFO operating profit in the band of $5-$5.2 billion compared with the $5.1 billion reported in fiscal 2022.
Kroger anticipates fiscal 2023 adjusted earnings between $4.45 and $4.60 per share, suggesting an increase from the adjusted earnings of $4.23 reported in fiscal 2022.
Shares of this Zacks Rank #3 (Hold) company have fallen 5.9% in the past three months compared with the industry’s decline of 7.5%.
The Zacks Consensus Estimate for Costco’s current financial-year revenues and EPS suggests growth of 7.3% and 8.6%, respectively, from the year-ago reported figure. Costco has a trailing four-quarter earnings surprise of 3.7%, on average.
Arhaus, which operates as a lifestyle brand and premium retailer in the home furnishing market, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 16.1%.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 54% and 26.1%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Albertsons Companies, which operates food and drug stores in the United States, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.4%.
The Zacks Consensus Estimate for Albertsons Companies’ current financial-year revenues and EPS suggests growth of 7.8% and 6.5%, respectively, from the year-ago reported figure. Albertsons Companies has a trailing four-quarter earnings surprise of 17.2%, on average.
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Kroger (KR) Q4 Earnings Beat Estimates, Identical Sales Up Y/Y
The Kroger Co. (KR - Free Report) came up with fourth-quarter fiscal 2022 results, wherein the top and bottom lines not only came ahead of the Zacks Consensus Estimate but also improved year over year. The company also registered growth in identical sales without fuel. Better execution and the sustained demand for food resulted in a stronger-than-anticipated quarter.
This Cincinnati, Ohio-based company has been making investments to enhance product freshness and quality and expand digital capabilities. Impressively, Kroger has been introducing new items under its “Our Brands” portfolio.
Let’s Introspect
Kroger posted adjusted earnings of 99 cents a share, which surpassed the Zacks Consensus Estimate of 90 cents and increased from the 91 cents reported in the prior-year quarter.
Total sales of $34,823 million came ahead of the Zacks Consensus Estimate of $34,781 million. Markedly, the metric rose from the $33,048 million reported in the year-ago period. Excluding fuel, sales rose 5.9% from the year-ago period. We note that identical sales, without fuel, jumped 6.2%. Our Brands’ identical sales rose 10.1%, while digital sales grew 12%.
We note that the gross margin was 21.8% of sales. The FIFO gross margin rate, excluding fuel, contracted 1 basis point compared to the same period last year. The adjusted FIFO operating profit came in at $1,274 million, up from the $1,014 million reported in the year-ago period.
The Kroger Co. Price, Consensus and EPS Surprise
The Kroger Co. price-consensus-eps-surprise-chart | The Kroger Co. Quote
Other Financial Aspects
Kroger ended the quarter with cash of $249 million, total debt of $13,378 million and shareowners’ equity of $10,014 million. Net total debt increased by $945 million over the last four quarters. Management estimates capital expenditures in the band of $3.4-$3.6 billion and expects to generate free cash flow between $2.3 billion and $2.5 billion in fiscal 2023.
2023 View
Management envisions identical sales, without fuel, to be up 1% to 2% in fiscal 2023, with underlying growth of 2.5% to 3.5% after adjusting for the effect of Express Scripts. The company anticipates the adjusted FIFO operating profit in the band of $5-$5.2 billion compared with the $5.1 billion reported in fiscal 2022.
Kroger anticipates fiscal 2023 adjusted earnings between $4.45 and $4.60 per share, suggesting an increase from the adjusted earnings of $4.23 reported in fiscal 2022.
Shares of this Zacks Rank #3 (Hold) company have fallen 5.9% in the past three months compared with the industry’s decline of 7.5%.
3 Hot Stocks to Consider
Here we have highlighted three better-ranked stocks, namely Costco (COST - Free Report) , Arhaus (ARHS - Free Report) and Albertsons Companies (ACI - Free Report) .
Costco, which operates membership warehouses, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 9.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Costco’s current financial-year revenues and EPS suggests growth of 7.3% and 8.6%, respectively, from the year-ago reported figure. Costco has a trailing four-quarter earnings surprise of 3.7%, on average.
Arhaus, which operates as a lifestyle brand and premium retailer in the home furnishing market, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 16.1%.
The Zacks Consensus Estimate for Arhaus’ current financial-year revenues and EPS suggests growth of 54% and 26.1%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
Albertsons Companies, which operates food and drug stores in the United States, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.4%.
The Zacks Consensus Estimate for Albertsons Companies’ current financial-year revenues and EPS suggests growth of 7.8% and 6.5%, respectively, from the year-ago reported figure. Albertsons Companies has a trailing four-quarter earnings surprise of 17.2%, on average.