Q3 Preview: Analysts are Mixed on Kroger (KR) Going into Earnings... Expect the Worst Hope for the Best
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Price: $55.91 -0.43%
Rating Summary:
13 Buy, 15 Hold, 8 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
Rating Summary:
13 Buy, 15 Hold, 8 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 13
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Shares of Kroger (NYSE: KR) are trading up roughly 3 percent Wednesday afternoon ahead of the company's third-quarter earnings report on Thursday, before the opening bell.
The third-quarter conference call is scheduled for the same day at 10:00 am ET (7am PT); Dial-in: 1-866-270-6057 (11443646).
Analysts on the Street are currently expecting Kroger to report earnings of $0.32 per share on $20.41 billion in sales. For the third quarter of 2010, the company reported earnings of $0.32 per share.
12 analysts rate shares of Kroger as a Buy, five analysts rate the stock as a Hold and three recommend selling the stock. The average price target on shares of KR is $25; analysts' price targets currently range from $18 to $31.
Goldman Sachs is bearish on shares of Kroger going into the company’s third-quarter release. The firm reaffirms its Sell rating and $20.50 price target. Goldman estimates quarterly earnings will fall below the consensus to $0.30 per share while top line trends remain robust. Goldman is modeling for Kroger’s results to mirror the rest of the industry.
The firm believes management may narrow its full year guidance to the high end of the range and announce that it used up the remainder of its $1 billion buyback plan, which was roughly $197 million.
An analyst at Goldman comments, “With overall industry sales growth at peak levels and competition becoming increasingly promotional, we remain sellers of KR ahead of the print. For 3Q, we expect KR will once again invest in price to drive traffic as peaking inflation is likely to pressure volumes. The combination of pressured selling gross margins and an increasing LIFO charge will likely overwhelm leverage on improving comps.”
Opposing Goldman’s bearish stance is Deutsche Bank who has a Buy rating and $28 price target on the shares. The firm estimates management will report earnings of $0.34 per share given its solid large scale market, strong local market share positions, loyalty card program, and on buybacks of common stock.
The firm notes Kroger has achieved strong tonnage growth for the past few quarters and believes they will continue to gain market share from weaker competitors. An analyst at Deutsche states, “Food inflation in the 4 percent range should also benefit KR’s non-fuel ID’s, as most of these price increases continue to get passed through to retail.”
Another key point the firm will be interested in is gross margin and how management is dealing with the situation. Deutsche forecasts non-fuel FIFO GPM will be down 25 bps. The company typically passes on all price increases to its customers.
The third-quarter conference call is scheduled for the same day at 10:00 am ET (7am PT); Dial-in: 1-866-270-6057 (11443646).
Analysts on the Street are currently expecting Kroger to report earnings of $0.32 per share on $20.41 billion in sales. For the third quarter of 2010, the company reported earnings of $0.32 per share.
12 analysts rate shares of Kroger as a Buy, five analysts rate the stock as a Hold and three recommend selling the stock. The average price target on shares of KR is $25; analysts' price targets currently range from $18 to $31.
Goldman Sachs is bearish on shares of Kroger going into the company’s third-quarter release. The firm reaffirms its Sell rating and $20.50 price target. Goldman estimates quarterly earnings will fall below the consensus to $0.30 per share while top line trends remain robust. Goldman is modeling for Kroger’s results to mirror the rest of the industry.
The firm believes management may narrow its full year guidance to the high end of the range and announce that it used up the remainder of its $1 billion buyback plan, which was roughly $197 million.
An analyst at Goldman comments, “With overall industry sales growth at peak levels and competition becoming increasingly promotional, we remain sellers of KR ahead of the print. For 3Q, we expect KR will once again invest in price to drive traffic as peaking inflation is likely to pressure volumes. The combination of pressured selling gross margins and an increasing LIFO charge will likely overwhelm leverage on improving comps.”
Opposing Goldman’s bearish stance is Deutsche Bank who has a Buy rating and $28 price target on the shares. The firm estimates management will report earnings of $0.34 per share given its solid large scale market, strong local market share positions, loyalty card program, and on buybacks of common stock.
The firm notes Kroger has achieved strong tonnage growth for the past few quarters and believes they will continue to gain market share from weaker competitors. An analyst at Deutsche states, “Food inflation in the 4 percent range should also benefit KR’s non-fuel ID’s, as most of these price increases continue to get passed through to retail.”
Another key point the firm will be interested in is gross margin and how management is dealing with the situation. Deutsche forecasts non-fuel FIFO GPM will be down 25 bps. The company typically passes on all price increases to its customers.
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