Kroger (KR) reported its financial results for fiscal 1Q18 on June 15, recording in-line earnings and better-than-consensus top-line forecasts.
As competition increased, premium grocer Whole Foods Market (WFM) failed to compete with the low-priced products on the shelves of Kroger (KR) and Walmart (WMT).
News of the Whole Foods acquisition has already given Amazon a boost, pushing its stock up 2.4% and adding $11.0 billion to its market cap, which nearly pays for the $13.7 billion deal.
Amazon (AMZN) announced on Friday, June 16, 2017, that it has entered into a definitive agreement to acquire Whole Foods Market (WFM) for $13.7 billion in an all-cash transaction.
Weak sales and volume growth is making nonalcoholic beverage companies like Coca-Cola, PepsiCo, and Dr Pepper Snapple focus on improving their margins.
As of June 13, Coca-Cola, PepsiCo, and Dr Pepper Snapple were trading at 12-month forward PE ratios of 23.8x, 22.4x, and 20.0x, respectively.
As of June 13, 16 out of 26 (61%) of the analysts covering Coca-Cola (KO) stock gave it a “hold” rating. Nine analysts have a “buy” rating.
Coca-Cola (KO) and PepsiCo (PEP) continue to expand their portfolio of better products through innovation and also via strategic acquisitions.
In 1Q17, Coca-Cola’s (KO) revenue fell 11.3% to $9.1 billion. This was the eighth consecutive quarter of revenue decline for the soda giant.
Beverage giants Coca-Cola (KO) and PepsiCo (PEP) have delivered better total returns than the S&P 500 Index on a YTD (year-to-date) basis.
Analysts covering Target (TGT) are maintaining a neutral outlook on the stock as the risk reward has balanced for the moment.
Last quarter, Target’s comps fell 1.3%, with an 0.80% decline in traffic. Walmart (WMT) and Costco (COST), however, are uniquely positioned, bucking the trend.
Target’s management is calling for a $200.0 million fall in EBIT (earnings before interest and tax) for fiscal 2Q17 due to lower sales and increased SG&A.
Target (TGT) recently announced a 3.3% hike in the quarterly dividend to $0.62 from $0.60. In fiscal 2016, it returned $1.3 billion to shareholders in the form of dividends.
Despite challenges and shoppers spending less on big-ticket items, Walmart managed to report positive comps across all of its US segments.
Recently, Aldi announced that it plans to invest $3.4 billion and expand its store count to 2,500 in the US (SPY) by the end of 2022.
According to a recent report from The Capital Forum, the FTC is set to block the pending merger of Walgreens Boots Alliance (WBA) and Rite Aid (RAD).
Kroger has 56% “buy” recommendations and 36% “hold” recommendations, for a rating of 2.3 on a scale of 1 (strong buy) to 5 (sell).
Kroger (KR) has been consistent in growing its earnings and margins, though its EPS (earnings per share) saw declines in the last two quarters of fiscal 2017.
After losing 17% in 2016, Kroger stock has fallen 12.5% on a year-to-date basis.