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Kroger (KR) to Report Q4 Earnings: What Awaits the Stock?

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The Kroger Co. (KR - Free Report) is likely to register an increase in the top line when it reports fourth-quarter fiscal 2020 results on Mar 4, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $31,012 million, indicating growth of 7.3% from the prior-year reported figure.

Further, the bottom line of this operator of supermarket chain is expected to improve year over year. We note that the Zacks Consensus Estimate for earnings for the quarter under review has been stable at 69 cents over the past 30 days. The figure suggests an improvement from 57 cents reported in the year-ago period.

Notably, the company has a trailing four-quarter earnings surprise of 15.4%, on average. In the last reported quarter, this Cincinnati, OH-based company’s bottom line surpassed the Zacks Consensus Estimate by 7.6%.

Key Factors to Note

Kroger has been making every effort to strengthen position not only with respect to products but also in terms of the way consumers prefer shopping. Given the structural shift from food consumed away from home to food consumed at home, the company has been making significant investments to enhance product freshness and quality, and expand digital capabilities. Impressively, Kroger has been introducing new items under its “Our Brands” portfolio. Cumulatively, these are likely to have aided the company’s fourth-quarter performance.

The company’s “Restock Kroger” program involving investments in omni-channel platform, identifying margin-rich alternative profit streams, merchandise optimization, and lowering of expenses have been gaining traction. Notably, the company has been prioritizing actions to resonate well with the prevailing crisis and burgeoning demand for necessary commodities. Realizing the need of the hour, the company has been offering a no-contact delivery option, low-contact pickup service and ship-to-home orders. Evidently, these have been driving identical sales without fuel.

On its last earnings call, management had guided total identical sales without fuel to be around 14% and adjusted earnings per share increase of 50-53% for fiscal 2020.

While aforementioned factors raise optimism, stiff competition in the grocery segment remains a significant headwind. Again, costs related to additional employee payments and benefits, and investments undertaken to preserve safety and health of customers and team members amid the coronavirus crisis might have weighed on the to-be-reported quarter’s margins.

The Kroger Co. Price, Consensus and EPS Surprise

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 a beat for Kroger this earnings season. 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Kroger has a Zacks Rank #3 but an Earnings ESP of 0.00%.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Ollie's Bargain Outlet (OLLI - Free Report) has an Earnings ESP of +3.73% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General (DG - Free Report) has an Earnings ESP of +1.23% and a Zacks Rank #3.

Costco (COST - Free Report) has an Earnings ESP of +1.81% and a Zacks Rank #3.

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