The Kroger Co.
) reached a 52-week high of $50.20 yesterday following the
company's better-than-expected first-quarter fiscal 2014 results
and upbeat outlook. Shares gained over 5% on the index before
closing at $49.66. Year to date, the stock has increased 27.4%.
The quarterly results were driven by the company's Customer 1st
strategy and acquisition of Harris Teeter. The company posted
earnings of $1.09 per share that surpassed the Zacks Consensus
Estimate of $1.05, and surged 18.5% year over year. Total sales
(including fuel center sales) grew 9.9% to $32,961 million from the
prior-year quarter, and also came ahead of the Zacks Consensus
Estimate of $32,636 million. Management stated that excluding fuel
center sales, total sales rose 11.4%. Including the most recent
quarter, the company has beaten the Zacks Consensus Estimate by an
average of 4.4% in the trailing four quarters.
Consequently, management raised its fiscal 2014 guidance.
Cincinnati-based Kroger now projects fiscal 2014 earnings in the
band of $3.19 to $3.27 per share, up from its earlier predicted
range of $3.14 to $3.25. The current Zacks Consensus Estimate for
fiscal 2014 is $3.22, which could witness an uptrend in the coming
Kroger, one of the largest grocery store retailers, has maintained
its strong performance despite a challenging macroeconomic backdrop
primarily due to sturdy super market sales growth. Quarterly
identical supermarket sales (stores that are open without expansion
or relocation for 5 full quarters) excluding fuel center sales,
increased 4.6% to $24,949 million.
Kroger now envisions identical supermarket sales (excluding fuel)
growth of 3% to 4% for fiscal 2014, up from the previous projection
of 2.5% to 3.5%.
Further, management continues to deploy capital to concentrate more
on remodeling, merchandising and other viable projects. Moreover,
acquisitions including that of Harris Teeter will continue to boost
the company's momentum.
Currently, Kroger carries a Zacks Rank #2 (Buy). Other stocks worth
considering in the retail sector include
Inventure Foods, Inc.
The Hain Celestial Group, Inc.
Sprouts Farmers Market, Inc
), all carrying a Zacks Rank #2.
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