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Things You Need to Know Before Kroger's (KR) Q3 Earnings

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The Kroger Co. (KR - Free Report) is slated to release third-quarter fiscal 2019 results on Dec 5. We note that in the trailing four quarters, the company’s bottom line has outperformed the Zacks Consensus Estimate by 3.6%, on average. In the last reported quarter, the company delivered a positive earnings surprise of 7.3%.

The Zacks Consensus Estimate for third-quarter earnings has been steady in the past 30 days at 48 cents. This is in line with the year-ago quarter’s reported figure. Meanwhile, the consensus mark for revenues is pegged at $28,067 million, suggesting growth of 1.4% from the prior-year period.

Key Factors to Note

Kroger has been trying all means to strengthen its position in the grocery space. Notably, the company’s “Restock Kroger” program involving investments in omnichannel platform, identifying margin-rich alternative profit streams, merchandise optimization and lowering of expenses has been gaining traction. Apart from these, its order online, pick up in store initiative and home delivery and self-checkout services are also worth mentioning.

As part of the program, the company has been making investments in space optimization, store remodeling and technology advancements. Cumulatively, these have been aiding identical supermarket sales.

While aforementioned factors raise optimism, stiff competition in the grocery segment and an aggressive promotional environment remain primary headwinds. Again, any volatility in fuel costs, higher freight expenses and incremental investments are likely to show on 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 an earnings beat for Kroger this time around. 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Kroger carries a Zacks Rank #3 but an Earnings ESP of -0.59%.

3 Stocks With Favorable Combination

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

Costco (COST - Free Report) has an Earnings ESP of +1.01% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

G-III Apparel Group (GIII - Free Report) has an Earnings ESP of +0.94% and a Zacks Rank #3.

Big Lots (BIG - Free Report) has an Earnings ESP of +3.85% and a Zacks Rank #3.

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