We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Kroger's (KR) Q1 Earnings & Sales Beat Estimates, Stock Up
Read MoreHide Full Article
The Kroger Co.’s (KR - Free Report) “Restock Kroger” program gave a solid start to fiscal 2018. After reporting in line earnings in the final quarter of fiscal 2017, this grocery retailer posted better-than-expected first-quarter results prompting management to raise the lower end of fiscal 2018 earnings view. As a result, the stock is up roughly 9% during pre-market trading hours.
The company delivered adjusted earnings of 73 cents a share that surpassed the Zacks Consensus Estimate of 63 cents and increased 25.9% from the prior-year quarter. This Cincinnati, OH-based company now envisions adjusted earnings in the range of $2.00-$2.15 per share compared with the prior forecast of $1.95-$2.15. The current Zacks Consensus Estimate for fiscal 2018 stands at $2.06.
Total sales grew 3.4% to $37,530 million from the prior-year quarter and also came ahead of the Zacks Consensus Estimate of $37,212 million, marking the seventh straight quarter of revenue beat. Excluding fuel center sales, total sales rose 2.3%. Excluding fuel and the recently-sold convenience store business unit, total sales jumped 2.8%. Digital sales surged 66% during the quarter under review.
The grocery industry has been undergoing a fundamental change, with technology playing a major role and the focus shifting to online shopping. Kroger, which faces stiff competition from bellwethers such as Walmart (WMT - Free Report) and Amazon (AMZN - Free Report) , has taken the stock of the situation and is in the process of giving itself a complete makeover.
The company is expanding store base, introducing new items, digital coupons, and order online, pick up in store initiative. The company’s “Restock Kroger” program is also gaining traction. These endeavors are likely to fuel top-line growth. The grocery industry is no longer shielded from the e-commerce war. Given this scenario, the Ocado deal along with the acquisition of Home Chef is definitely a good move by Kroger to stay abreast in the race.
These endeavors have helped the shares of Kroger to surge 12% in the past three months compared with the industry that declined 2%. We believe that the company's operational strategies present enormous opportunities to augment identical supermarket sales and enhance return on invested capital.
The company’s identical supermarket sales, excluding fuel center sales, grew 1.4%. Including Kroger Specialty Pharmacy and ship-to-home solutions – Kroger's identical sales, without fuel, rose 1.9% in the quarter. Kroger now projects fiscal 2018 identical sales growth, excluding fuel, to be in the range of 2-2.5%.
Kroger ended the quarter with cash of $315 million, total debt of $14,301 million, and shareholders’ equity of $6,941 million. Total debt increased $857 million from the prior-year period. The company's net total debt to adjusted EBITDA ratio jumped to 2.43 compared with 2.33 in the year-ago period. In the trailing four quarters, the company bought back $2.7 billion of shares and paid $442 million in dividends.
Management continues to project capital expenditures — excluding mergers, acquisitions and purchases of leased facilities — to be approximately $3 billion for fiscal 2018.
Bottom Line
We believe that Kroger’s dominant position enables it to expand store base and boost market share. The company’s customer-centric business model provides a strong value proposition to consumers. However, intensifying price war among grocery stores to lure budget-constrained consumers poses concern.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Kroger's (KR) Q1 Earnings & Sales Beat Estimates, Stock Up
The Kroger Co.’s (KR - Free Report) “Restock Kroger” program gave a solid start to fiscal 2018. After reporting in line earnings in the final quarter of fiscal 2017, this grocery retailer posted better-than-expected first-quarter results prompting management to raise the lower end of fiscal 2018 earnings view. As a result, the stock is up roughly 9% during pre-market trading hours.
The company delivered adjusted earnings of 73 cents a share that surpassed the Zacks Consensus Estimate of 63 cents and increased 25.9% from the prior-year quarter. This Cincinnati, OH-based company now envisions adjusted earnings in the range of $2.00-$2.15 per share compared with the prior forecast of $1.95-$2.15. The current Zacks Consensus Estimate for fiscal 2018 stands at $2.06.
Total sales grew 3.4% to $37,530 million from the prior-year quarter and also came ahead of the Zacks Consensus Estimate of $37,212 million, marking the seventh straight quarter of revenue beat. Excluding fuel center sales, total sales rose 2.3%. Excluding fuel and the recently-sold convenience store business unit, total sales jumped 2.8%. Digital sales surged 66% during the quarter under review.
The grocery industry has been undergoing a fundamental change, with technology playing a major role and the focus shifting to online shopping. Kroger, which faces stiff competition from bellwethers such as Walmart (WMT - Free Report) and Amazon (AMZN - Free Report) , has taken the stock of the situation and is in the process of giving itself a complete makeover.
The company is expanding store base, introducing new items, digital coupons, and order online, pick up in store initiative. The company’s “Restock Kroger” program is also gaining traction. These endeavors are likely to fuel top-line growth. The grocery industry is no longer shielded from the e-commerce war. Given this scenario, the Ocado deal along with the acquisition of Home Chef is definitely a good move by Kroger to stay abreast in the race.
These endeavors have helped the shares of Kroger to surge 12% in the past three months compared with the industry that declined 2%. We believe that the company's operational strategies present enormous opportunities to augment identical supermarket sales and enhance return on invested capital.
The company’s identical supermarket sales, excluding fuel center sales, grew 1.4%. Including Kroger Specialty Pharmacy and ship-to-home solutions – Kroger's identical sales, without fuel, rose 1.9% in the quarter. Kroger now projects fiscal 2018 identical sales growth, excluding fuel, to be in the range of 2-2.5%.
The Kroger Co. Price, Consensus and EPS Surprise
The Kroger Co. Price, Consensus and EPS Surprise | The Kroger Co. Quote
Other Financial Aspects
Kroger ended the quarter with cash of $315 million, total debt of $14,301 million, and shareholders’ equity of $6,941 million. Total debt increased $857 million from the prior-year period. The company's net total debt to adjusted EBITDA ratio jumped to 2.43 compared with 2.33 in the year-ago period. In the trailing four quarters, the company bought back $2.7 billion of shares and paid $442 million in dividends.
Management continues to project capital expenditures — excluding mergers, acquisitions and purchases of leased facilities — to be approximately $3 billion for fiscal 2018.
Bottom Line
We believe that Kroger’s dominant position enables it to expand store base and boost market share. The company’s customer-centric business model provides a strong value proposition to consumers. However, intensifying price war among grocery stores to lure budget-constrained consumers poses concern.
Kroger carries a Zacks Rank #3 (Hold). A favorably-ranked stock includes The Chefs' Warehouse, Inc. (CHEF - Free Report) having a long-term earnings growth rate of 22% with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>