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Will Kroger (KR) Succeed in Reporting Higher Q1 Earnings?

The Kroger Co.KR is slated to release first-quarter fiscal 2018 results on Jun 21. In the trailing four quarters, it outperformed the Zacks Consensus Estimate by an average of roughly 2.3%. In the preceding quarter, the company reported in line earnings. Let's see how things are shaping up prior to this announcement.

Investors are keeping their fingers crossed and hoping for a positive earnings surprise from Kroger in the quarter to be reported. The Zacks Consensus Estimate for the quarter under review is 63 cents, reflecting a year-over-year increase of roughly 9%. We observe that the Zacks Consensus Estimate has decreased by a penny in the past 30 days. Analysts polled by Zacks expect revenues of $37,012 million, up approximately 2% from the year-ago quarter.

Which Factors Hold Key to Kroger's Performance?

The grocery industry has been undergoing a fundamental change, with technology playing a major role and the focus shifting to online shopping. Kroger has taken the stock of the situation and is in the process of giving itself a complete makeover. The company is expanding store base, introducing new items, digital coupons, and order online, pick up in store initiative. The company's "Restock Kroger" program is also gaining traction. These endeavors are likely to fuel top-line growth.

Kroger is looking to expand its "Scan, Bag, Pay & Go and Self-CheckOut" program - piloted at 20 stores - to nearly 400 locations in 2018. Further, Ralphs - a unit of grocery giant - in partnership with Instacart is offering home delivery at select locations.

The grocery industry is no longer shielded from the e-commerce war. Given this scenario, the Ocado deal along with the acquisition of Home Chef is definitely a good move by Kroger to stay abreast in the race.

Kroger's Customer 1st strategy that enriches the consumers shopping experience and convinces them of returning to the store is also benefiting the company. We believe that its operational strategies present enormous opportunities to augment identical supermarket sales, alleviate gross margin pressure, improve operating margin and enhance return on invested capital.

The Kroger Co. Price, Consensus and EPS Surprise

The Kroger Co. Price, Consensus and EPS Surprise | The Kroger Co. Quote

What the Zacks Model Unveils?

Our proven model shows that Kroger is likely to beat estimates this quarter. A stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Kroger has a Zacks Rank #3 and an Earnings ESP of +2.77%. This makes us reasonably confident of an earnings beat.

Other Stocks With Favorable Combination

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

Sonic Corp. SONC has an Earnings ESP of +0.71% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

Helen of Troy Limited HELE has an Earnings ESP of +3.57% and a Zacks Rank #2.

Unifirst Corporation UNF has an Earnings ESP of +0.64% and a Zacks Rank #3.

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The Kroger Co. (KR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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