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Kroger Delivers Earnings Beat for the 11th Time

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Sep. 12 2016, Published 1:51 p.m. ET

Kroger delivers earnings beat, misses on revenue

On September 9, 2016, Cincinnati-based Kroger (KR) reported financial results for the second quarter of fiscal 2017, which ended August 13, 2016. The company had its 11th consecutive beat on its bottom line, cutting analyst estimates by $0.02 per share. EPS (earnings per share) stood at $0.47, rising 6.8% compared to the same quarter last year.

The company’s top line, however, once again failed to meet expectations. Total revenue stood at $26.6 billion, missing the consensus by $220 million.

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About Kroger

Founded in 1883, Kroger (KR) is the largest US supermarket chain and one of the world’s largest grocery retailers, surpassed only by Walmart (WMT) in grocery sales. The company operates 2,778 supermarkets, 784 convenience stores, and 323 fine jewelry stores in 35 US states as of July 31, 2016.

Kroger is a component of the S&P 500 Index and the S&P 500 Food & Staples Retail Index. It makes up 2.5% of the Guggenheim S&P 500 Equal Weight Consumer Staples ETF (RHS) and 1.8% of the SPDR Consumer Staples Select Sector ETF (XLP).

Valuations update

After stellar performances in 2014 and 2015, Kroger stock is sitting at YTD (year-to-date) losses of more than 23%.

Despite its strong fundamentals, the company continues to trade at a discount to its peers. It currently trades at a one-year forward price-to-earnings ratio of 14x compared to 19x, 21x, and 16x for Whole Foods Market (WFM), Sprouts Farmers Market (SFM), and Walmart (WMT).[1. all information as of September 9, 2016]

What this series is all about

This series is an overview of Kroger’s 2Q17 results. We’ll evaluate the company’s financial performance in the current quarter and look at the key drivers for its earnings beat and revenue miss. We’ll also look at the company’s revised guidance in the wake of a deteriorating price environment and discuss Wall Street’s recommendations. Finally, we’ll touch briefly on the company’s current valuation and stock market performance.

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