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

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The Kroger Co. KR is slated to release fourth-quarter fiscal 2019 results on Mar 5, before the opening bell. We note that in the last reported quarter, the company recorded a negative earnings surprise of 2.1%.

The Zacks Consensus Estimate for fourth-quarter earnings has remained unchanged in the past 30 days at 56 cents. This suggests year-over-year increase of 16.7% from the prior-year reported figure. Meanwhile, the consensus mark for revenues is pegged at $28,753 million, suggesting growth of 2.4% from the prior-year period.

Key Factors to Note

Kroger, which operates in the thin-margin grocery industry, has been trying all means to strengthen position, not only with respect to products but also in terms of the way consumers prefer shopping grocery. The company is launching plant-based products and eyeing technological expansion.

Notably, the company’s “Restock Kroger” program involving investments in omni-channel 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 #4 (Sell) and an Earnings ESP of 0.00%.

Stocks With Favorable Combination

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

Dollar Tree DLTR has an Earnings ESP of +0.32% and a Zacks Rank of #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Abercrombie & Fitch ANF has an Earnings ESP of +0.12% and a Zacks Rank #3.

Casey's General Stores CASY has an Earnings ESP of +3.45% and a Zacks Rank #3.

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