Key Takeaways from Kroger’s 3Q Results

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Part 5
Key Takeaways from Kroger’s 3Q Results PART 5 OF 5

How Kroger’s Fiscal 3Q18 Results Helped Stop Its Stock Slide

Kroger’s stock surges after 3Q18 results

Kroger’s (KR) strong fiscal 3Q18 results were followed by one of its best days on the stock market. The company gained ~13.6% on November 30, before finally settling at a 6% gain at the day’s close. The supermarket giant’s YTD (year-to-date) losses have now been reduced to 22% as of December 4, 2017.

Still, Kroger continues to underperform most other big retailers. Wal-Mart Stores (WMT), Costco Wholesale (COST), and Dollar Tree (DLTR) are looking at YTD gains of 40%, 23%, and 38%, respectively, YTD, while Sprouts Farmers Market (SFM) has gained 27% so far this year.

How Kroger’s Fiscal 3Q18 Results Helped Stop Its Stock Slide

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Kroger has also underperformed the S&P Food and Retail Index, which has gained 10% YTD, and the S&P 500 Index (SPX), which has gained 18% YTD.

Kroger’s poor stock market performance this year is a result of ongoing pessimism and uncertainty about the impact of the Amazon-Whole Foods deal, as well as Kroger’s weak results in fiscal 2Q18.

Analyst actions after Kroger’s results

Among the 25 Wall Street analysts tracking Kroger, the consensus rating for KR is now 2.5 on a scale of 1.0 (“strong buy”) to 5.0 (“sell”). Notably, 36% of these analysts, including Northcoast Research and Pivotal Research, suggest a “buy” for KR stock, while 56%, including J.P. Morgan, Deutsche Bank, Stephens, and Morgan Stanley, recommend a “hold.” The remaining 8% recommend a “sell.”

There were no rating changes after the Kroger’s fiscal 3Q18 results. However, a number of brokers raised their price target for the stock. These include UBS ($24 raised to $28), J.P. Morgan ($20 raised to $23), Telsey Advisory ($24 raised to $28), Deutsche Bank ($21 raised to $26), and Jefferies ($19 raised to $24).

Kroger currently has an average price target of $26.55, indicating a downside of 1% as of its share price of $26.88 on December 4.


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