The Kroger Co. KR is slated to release first-quarter fiscal 2020 results on Jun 18, before the opening bell. The company’s top line is likely to have improved in the quarter under review. The Zacks Consensus Estimate for revenues is pegged at $40,120 million, indicating growth of 7.7% from the prior-year reported figure.
Further, the bottom line is expected to have improved year over year. We note that the Zacks Consensus Estimate for earnings for the quarter under review has been stable at 89 cents over the past 30 days. The figure suggests an improvement of 23.6% from the prior-year quarter.
Notably, the company has a trailing four-quarter positive earnings surprise of 2.1%, on average. In the last reported quarter, this Cincinnati, OH-based company’s bottom line surpassed the Zacks Consensus Estimate by 1.8%.
Key Factors to Note
Kroger, which operates in the thin-margin grocery industry, has been making every effort to strengthen position not only with respect to products but also in terms of the way consumers prefer shopping grocery. The company has been focusing on plant-based products and eyeing technological expansion.
Notably, the company’s “Restock Kroger” program involving investments in omni-channel platform, identifying margin-rich alternative profit streams, merchandise optimization, and lowering of expenses has been gaining traction. Apart from these, its order online, pick up in store initiative and home delivery and self-checkout services are also worth mentioning. As part of the program, the company has been making investments in space optimization, store remodeling and technology advancements. Cumulatively, these have been aiding identical supermarket sales.
Driven largely by coronavirus-led demand, Kroger registered a sharp rise in sales across both brick-&-mortar stores and digital channels during the month of March. Notably, identical retail supermarket sales, without fuel, surged approximately 30% during the month. The company expects first-quarter fiscal 2020 identical sales without fuel and adjusted earnings per share to fare better than the annual growth rate. Management anticipates identical sales, excluding fuel, to be above 2.25% and earnings between $2.30 and $2.40 per share.
While aforementioned factors raise optimism, stiff competition in the grocery segment and an aggressive promotional environment remain primary headwinds. Again, any volatility in fuel costs, higher freight expenses and incremental investments are likely to show on margins.
The Kroger Co. Price, Consensus and EPS Surprise
The Kroger Co. price-consensus-eps-surprise-chart | The Kroger Co. Quote
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Kroger this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Kroger carries a Zacks Rank #2 but an Earnings ESP of 0.00%.
Stocks With Favorable Combination
Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Helen of Troy Limited HELE has an Earnings ESP of +11.48% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Darden Restaurants DRI has an Earnings ESP of +10.37% and a Zacks Rank of #3.
General Mills GIS has an Earnings ESP of +0.38% and a Zacks Rank #3.
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