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The Kroger Co. (KR) Hits Fresh High: Is There Still Room to Run?
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Shares of Kroger (KR - Free Report) have been strong performers lately, with the stock up 17.3% over the past month. The stock hit a new 52-week high of $57.26 in the previous session. Kroger has gained 23.7% since the start of the year compared to the 10.3% move for the Zacks Retail-Wholesale sector and the 16.2% return for the Zacks Retail - Supermarkets industry.
What's Driving the Outperformance?
The stock has an impressive 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 March 7, 2024, The Kroger Co. reported EPS of $1.34 versus consensus estimate of $1.13 while it missed the consensus revenue estimate by 0.5%.
For the current fiscal year, The Kroger Co. is expected to post earnings of $4.44 per share on $147.97 billion in revenues. This represents a -6.72% change in EPS on a -1.38% change in revenues. For the next fiscal year, the company is expected to earn $4.65 per share on $150.85 billion in revenues. This represents a year-over-year change of 4.8% and 1.95%, respectively.
Valuation Metrics
The Kroger Co. 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 has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort 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. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
The Kroger Co. has a Value Score of A. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 12.7X current fiscal year EPS estimates, which is a premium to the peer industry average of 12.6X. On a trailing cash flow basis, the stock currently trades at 5.6X versus its peer group's average of 5.8X. Additionally, the stock has a PEG ratio of 2.63. 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, The Kroger Co. 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 The Kroger Co. meets the list of requirements. Thus, it seems as though The Kroger Co. shares could still be poised for more gains ahead.
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The Kroger Co. (KR) Hits Fresh High: Is There Still Room to Run?
Shares of Kroger (KR - Free Report) have been strong performers lately, with the stock up 17.3% over the past month. The stock hit a new 52-week high of $57.26 in the previous session. Kroger has gained 23.7% since the start of the year compared to the 10.3% move for the Zacks Retail-Wholesale sector and the 16.2% return for the Zacks Retail - Supermarkets industry.
What's Driving the Outperformance?
The stock has an impressive 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 March 7, 2024, The Kroger Co. reported EPS of $1.34 versus consensus estimate of $1.13 while it missed the consensus revenue estimate by 0.5%.
For the current fiscal year, The Kroger Co. is expected to post earnings of $4.44 per share on $147.97 billion in revenues. This represents a -6.72% change in EPS on a -1.38% change in revenues. For the next fiscal year, the company is expected to earn $4.65 per share on $150.85 billion in revenues. This represents a year-over-year change of 4.8% and 1.95%, respectively.
Valuation Metrics
The Kroger Co. 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 has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort 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. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
The Kroger Co. has a Value Score of A. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 12.7X current fiscal year EPS estimates, which is a premium to the peer industry average of 12.6X. On a trailing cash flow basis, the stock currently trades at 5.6X versus its peer group's average of 5.8X. Additionally, the stock has a PEG ratio of 2.63. 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, The Kroger Co. 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 The Kroger Co. meets the list of requirements. Thus, it seems as though The Kroger Co. shares could still be poised for more gains ahead.