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Time to Buy Kroger (KR) Stock After Alibaba (BABA) Partnership?
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Shares of Kroger (KR - Free Report) surged over 2.3% Tuesday to inch close to their 52-week high after the company announced a partnership with Chinese e-commerce powerhouse and Amazon (AMZN - Free Report) rival Alibaba (BABA - Free Report) . The deal marks the U.S. grocery giant’s first push into international markets and represents the continuation of a much larger e-commerce venture.
The Deal
Kroger said on Tuesday that it will begin to sell products in China via Alibaba’s Tmall Global platform, which is the Chinese firm’s site for international brands. The Cincinnati-based grocer said it will launch on Wednesday with initial offerings that feature its relatively new natural and organic Simple Truth brand, which Kroger said reached $2 billion in sales earlier this year—making it the largest natural and organic brand in America, according to the firm.
The two companies did not reveal the financial details of the partnership, but the Wall Street Journal reported that Kroger executives traveled to India, Japan, Europe, and China to study consumer habits and had been negotiating the company’s first overseas deal for months. “E-commerce enables Kroger to quickly scale to reach new customers and markets where we don't operate physical stores, starting with China," Kroger's chief digital officer, Yael Cosset, said in a statement.
“We anticipate Chinese consumers will love Our Brands—starting with Simple Truth products—just like our American customers do... Sharing Kroger's exclusive brands and status as a food authority the world over is exciting."
Alibaba launched Tmall Global to allow retailers that don’t operate in China the chance to sell goods online and ship products into the world’s second-largest economy. Meanwhile, Kroger noted that its Simple Truth brand is currently the second-largest brand it sells, which is rather impressive since it made its debut only five years ago. The U.S. grocery chain’s venture into China is part of its massive “Restock Kroger” program.
Kroger Overview
Kroger, like other larger retailers with massive grocery businesses, such as Walmart (WMT - Free Report) , Target (TGT - Free Report) , and Costco (COST - Free Report) , have jumped headfirst into e-commerce and delivery to fight off Amazon’s encroachment. The company currently offers online ordering and curbside pickup through its ClickList service.
Furthermore, Kroger recently announced a merger with private meal kit powerhouse Home Chef in an effort to compete against the likes of Blue Apron , HelloFresh, and Plated—which supermarket chain Albertsons bought last year. Kroger also expanded its partnership with grocery delivery startup powerhouse Instacart, which works with companies from CVS (CVS - Free Report) to Aldi.
Kroger saw its digital sales skyrocket 66% in its most recent quarter. The company also announced that it upped its investment in Ocado, an online supermarket delivery firm, to help improve its online ordering, automated fulfillment, and home delivery capabilities.
Kroger also introduced in late June a partnership with Nuro, which boasts the claim of being the maker of the world's first fully unmanned road vehicle. The two companies noted that consumers can place same-day delivery orders through Kroger's ClickList ordering system and Nuro's app. The pilot run is expected to begin in the fall, with orders set to be delivered via Nuro's fleet of small autonomous vehicles.
Bottom Line
Kroger currently boasts 2,800 stores in 35 states. The company posted fiscal 2017 revenues of $122.7 billion across its family of companies, which made it one of the world's largest retailers by revenue.
Looking ahead, the company’s current quarter revenues are projected to pop by roughly 0.72% to reach $27.80 billion, based on our current Zacks Consensus Estimate. Meanwhile, Kroger’s full-year earnings are expected to climb by 3.92%. Investors should also note that Kroger is currently trading at 13.6X forward 12-month Zacks Consensus EPS, which marks a discount compared to its industry’s 16.5X average and the S&P 500’s 17.2X.
Kroger is currently a Zacks Rank #3 (Hold) and sports “A” grades for both Value and Growth in our Style Scores system. Plus, the company looks ready to thrive in the new retail age.
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Time to Buy Kroger (KR) Stock After Alibaba (BABA) Partnership?
Shares of Kroger (KR - Free Report) surged over 2.3% Tuesday to inch close to their 52-week high after the company announced a partnership with Chinese e-commerce powerhouse and Amazon (AMZN - Free Report) rival Alibaba (BABA - Free Report) . The deal marks the U.S. grocery giant’s first push into international markets and represents the continuation of a much larger e-commerce venture.
The Deal
Kroger said on Tuesday that it will begin to sell products in China via Alibaba’s Tmall Global platform, which is the Chinese firm’s site for international brands. The Cincinnati-based grocer said it will launch on Wednesday with initial offerings that feature its relatively new natural and organic Simple Truth brand, which Kroger said reached $2 billion in sales earlier this year—making it the largest natural and organic brand in America, according to the firm.
The two companies did not reveal the financial details of the partnership, but the Wall Street Journal reported that Kroger executives traveled to India, Japan, Europe, and China to study consumer habits and had been negotiating the company’s first overseas deal for months. “E-commerce enables Kroger to quickly scale to reach new customers and markets where we don't operate physical stores, starting with China," Kroger's chief digital officer, Yael Cosset, said in a statement.
“We anticipate Chinese consumers will love Our Brands—starting with Simple Truth products—just like our American customers do... Sharing Kroger's exclusive brands and status as a food authority the world over is exciting."
Alibaba launched Tmall Global to allow retailers that don’t operate in China the chance to sell goods online and ship products into the world’s second-largest economy. Meanwhile, Kroger noted that its Simple Truth brand is currently the second-largest brand it sells, which is rather impressive since it made its debut only five years ago. The U.S. grocery chain’s venture into China is part of its massive “Restock Kroger” program.
Kroger Overview
Kroger, like other larger retailers with massive grocery businesses, such as Walmart (WMT - Free Report) , Target (TGT - Free Report) , and Costco (COST - Free Report) , have jumped headfirst into e-commerce and delivery to fight off Amazon’s encroachment. The company currently offers online ordering and curbside pickup through its ClickList service.
Furthermore, Kroger recently announced a merger with private meal kit powerhouse Home Chef in an effort to compete against the likes of Blue Apron , HelloFresh, and Plated—which supermarket chain Albertsons bought last year. Kroger also expanded its partnership with grocery delivery startup powerhouse Instacart, which works with companies from CVS (CVS - Free Report) to Aldi.
Kroger saw its digital sales skyrocket 66% in its most recent quarter. The company also announced that it upped its investment in Ocado, an online supermarket delivery firm, to help improve its online ordering, automated fulfillment, and home delivery capabilities.
Kroger also introduced in late June a partnership with Nuro, which boasts the claim of being the maker of the world's first fully unmanned road vehicle. The two companies noted that consumers can place same-day delivery orders through Kroger's ClickList ordering system and Nuro's app. The pilot run is expected to begin in the fall, with orders set to be delivered via Nuro's fleet of small autonomous vehicles.
Bottom Line
Kroger currently boasts 2,800 stores in 35 states. The company posted fiscal 2017 revenues of $122.7 billion across its family of companies, which made it one of the world's largest retailers by revenue.
Looking ahead, the company’s current quarter revenues are projected to pop by roughly 0.72% to reach $27.80 billion, based on our current Zacks Consensus Estimate. Meanwhile, Kroger’s full-year earnings are expected to climb by 3.92%. Investors should also note that Kroger is currently trading at 13.6X forward 12-month Zacks Consensus EPS, which marks a discount compared to its industry’s 16.5X average and the S&P 500’s 17.2X.
Kroger is currently a Zacks Rank #3 (Hold) and sports “A” grades for both Value and Growth in our Style Scores system. Plus, the company looks ready to thrive in the new retail age.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>