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Analyst Blog

On Jul 22, 2013, shares of The Kroger Company (KR - Analyst Report) recorded a new 52-week high of $39.05, up 49.5% year to date.

The current price is 10.8% above the Zacks Consensus average price target of $35.25. Moreover, the stock is currently trading at a forward P/E of 13.95x, an 8.9% discount to the peer group average of 15.32x. The long-term EPS growth rate stands healthy at 8.7%.

Kroger’s leading position among the nation’s largest grocery retailers enables it to sustain growth in the top and bottom lines, expand its store base and boost its market share. The company is also well positioned to deliver higher earnings, primarily through strong super market sales (sans fuel).

The company’s Customer 1st strategy provides a strong value proposition to consumers. The company’s value offerings further facilitate it to retain customers and in turn generate identical supermarket sales growth.

Moreover, this Zacks Rank #2 (Buy) company announced its decision to acquire all the shares of regional grocer, Harris Teeter Supermarkets Inc. . The deal is a strategic fit for Kroger as it facilitates the company in expanding its footprint in several attractive and high-growth markets including Delaware, Florida, Maryland and Washington, DC, where Kroger currently does not have a presence. Kroger will also get hold of Harris Teeter’s distribution centers for grocery, frozen and perishable food in Greensboro and Indian Trail, N.C. and a dairy facility in High Point, N.C.

Other Stocks to Consider

Besides Kroger, another attractive stock in the retail wholesale sector includes Ingles Markets, Incorporated (IMKTA - Snapshot Report), which carries a Zacks Rank #1 (Strong Buy). The Fresh Market, Inc. (TFM - Snapshot Report), carrying a Zacks Rank #2 (Buy) is also worth considering.

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