Kroger Co (NYSE: KR) is trading up in premarket on Thursday after coming in ahead of Street estimates for its first financial quarter.
Shares of the retail firm are still down some 10% versus their year-to-date high.
Kroger offers positive outlook
Kroger stock is gaining this morning because the management issued good enough guidance for the future as well. KR now forecasts its adjusted per-share earnings to fall between $4.30 and $4.50.
Experts had forecast $4.43 a share instead. Rodney McMullen – the chief executive of Kroger Inc said in a press release today:
Kroger is off to a solid start in 2024 led by better-than-expected performance of our grocery business.Kroger is delivering exceptional value at a time when many customers need it more than ever, by providing affordable prices with personalized promotions.
Kroger saw gross margin come in at 22.4% of sales in Q1. Kroger shares currently pay a dividend yield of 2.23%.
Watch here: https://www.youtube.com/embed/LTZQh6t4u4I?feature=oembed
Kroger Q1 earnings snapshot
- Earned $947 million versus the year-ago $962 million
- Per-share earnings also inched down from $1.32 to $1.29
- Adjusted EPS printed at $1.43 as per the earnings report
- Revenue remained roughly unchanged at $45.3 billion
- Consensus was $1.33 a share on $45.05 billion in revenue
Kroger expects its adjusted free cash flow to hit as much as $2.7 billion in 2024. CEO McMullen also said on Thursday:
The long-term investments we have made to strengthen and diversify our model enables us to manage economic cycles and gives us the confidence to deliver on our full year outlook.
Should you buy Kroger stock?
Kroger reported a more than 8.0% annualised growth in its digital sales for the first quarter today.
Ahead of its earnings release, Kelly Bania – a BMO Capital analyst upgraded Kroger stock to “outperform” and raised her price target to $60 that translates to an over 10% upside from here. Bania told clients in her recent research note:
The stock has pulled back on fear of increasing price investments across the space, but we believe [Kroger’s] positioning in the industry allows it to continue managing the competitive environment with stable [gross margin percentages].
BMO analyst is convinced that KR shares are well positioned with or without the Albertsons acquisition. In fact, she currently sees only a 30% chance of a deal while a 70% probability of a no deal.
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