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The Kroger Co. (KR) Hit a 52 Week High, Can the Run Continue?
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Shares of Kroger (KR - Free Report) have been strong performers lately, with the stock up 13.2% over the past month. The stock hit a new 52-week high of $50.65 in the previous session. Kroger has gained 10.5% since the start of the year compared to the 8.4% move for the Zacks Retail-Wholesale sector and the 14.8% return for the Zacks Retail - Supermarkets industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 30, 2023, Kroger reported EPS of $0.95 versus consensus estimate of $0.9.
For the current fiscal year, Kroger is expected to post earnings of $4.36 per share on $150.23 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $4.47 per share on $148.47 billion in revenues. This represents a year-over-year change of -4.48% and -1.18%, respectively.
Valuation Metrics
Kroger may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Kroger has a Value Score of A. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 11.6X current fiscal year EPS estimates, which is not in-line with the peer industry average of 11.8X. On a trailing cash flow basis, the stock currently trades at 5.3X versus its peer group's average of 5.7X. Additionally, the stock has a PEG ratio of 2.41. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Kroger currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Kroger meets the list of requirements. Thus, it seems as though Kroger shares could have a bit more room to run in the near term.
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The Kroger Co. (KR) Hit a 52 Week High, Can the Run Continue?
Shares of Kroger (KR - Free Report) have been strong performers lately, with the stock up 13.2% over the past month. The stock hit a new 52-week high of $50.65 in the previous session. Kroger has gained 10.5% since the start of the year compared to the 8.4% move for the Zacks Retail-Wholesale sector and the 14.8% return for the Zacks Retail - Supermarkets industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 30, 2023, Kroger reported EPS of $0.95 versus consensus estimate of $0.9.
For the current fiscal year, Kroger is expected to post earnings of $4.36 per share on $150.23 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $4.47 per share on $148.47 billion in revenues. This represents a year-over-year change of -4.48% and -1.18%, respectively.
Valuation Metrics
Kroger may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Kroger has a Value Score of A. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 11.6X current fiscal year EPS estimates, which is not in-line with the peer industry average of 11.8X. On a trailing cash flow basis, the stock currently trades at 5.3X versus its peer group's average of 5.7X. Additionally, the stock has a PEG ratio of 2.41. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Kroger currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Kroger meets the list of requirements. Thus, it seems as though Kroger shares could have a bit more room to run in the near term.