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Revisiting Kroger ahead of Its Fiscal 4Q17 Results

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Kroger’s fiscal 4Q17 preview

The Kroger Company (KR), America’s largest supermarket company, is scheduled to report its fiscal 4Q17 and fiscal 2017 results on March 2, 2017.

In fiscal 3Q17, the company’s earnings fell 4.7% YoY (year-over-year) to $0.41 per share, missing analysts’ consensus estimate by $0.01. Its total revenue improved 5.9% YoY to $26.6 billion, $310 million more than analysts’ consensus estimate.

For fiscal 4Q17, Wall Street is predicting an 8.8% fall in Kroger’s EPS (earnings per share) to $0.52 on a 4.3% rise in its total revenue.

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About Kroger

With trailing-12-month sales of $114 billion, Kroger is the largest US supermarket chain and one of the world’s largest grocery retailers, surpassed only by Walmart (WMT). The company operates 2,796 supermarket stores, 787 convenience stores, and 324 fine jewelry stores in 35 US states as of December 2016.

Kroger has a market capitalization of $31.2 billion as of February 22, 2017. The company makes up part of the S&P 500 Index (SPX-Index) and the S&P 500 Food & Staples Retail Index. It constitutes 2.5% of the Guggenheim S&P 500 Equal Weight Consumer Staples ETF (RHS) and 1.9% of the SPDR Consumer Staples Select Sector ETF (XLP).

Valuation overview

Kroger is currently trading at a one-year forward price-to-earnings multiple (or PE) of 15.7x, operating in the middle of its 52-week PE range of 13.4x–18.6x.

The company continues to operate at a discount to its natural and organic food competitors Whole Foods Market (WFM) and Sprouts Farmers Market (SFM), which are trading at 23.3x and 21.7x, respectively. Its valuation is similar to Walmart’s (WMT) 16.5x, but it’s cheaper than Costco’s (COST) 29.3x.

What’s this series all about?

In this series, we’ll preview Kroger’s fiscal 4Q17 and fiscal 2017 results. We’ll discuss the company’s financial performance, review its key revenue drivers and profitability, discuss Wall Street’s expectations, evaluate its stock market performance, and look at its current valuation.

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