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Inside Kroger’s Fiscal 1Q18 Expectations: An Investor Overview

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Jun. 12 2017, Updated 1:43 p.m. ET

Kroger’s fiscal 1Q18 results preview

Cincinnati-based Kroger (KR) is slated to report its fiscal 1Q18 results on June 15, 2017. The company is expected to post an 18.6% fall in EPS (earnings per share) to $0.57 and total sales of $35.7 billion—3.3% higher on a YoY (year-over-year) basis.

During fiscal 2017, the company missed twice on its top line but cruised ahead of its bottom-line estimates in all quarters. It reported fiscal 2017 earnings of $2.12 per share, or 2.9% higher YoY, and total revenues of $115.3 billion, or 5% higher YoY.

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About Kroger

With trailing-12-month sales of $115.3 billion, Kroger is the largest supermarket chain in the US and one of the world’s largest grocery retailers, surpassed only by Wal-Mart Stores (WMT). The company operates 2,796 supermarket stores, 319 fine jewelry stores, and 784 convenience stores in 35 states in the US.

Kroger has a market capitalization of $27 billion (as of June 8, 2017). The company is a component of the S&P 500 Index (SPX) and the S&P 500 Food & Staples Retail Index. KR makes up 3.9% of the VanEck Retail ETF (RTH).

Valuations summary

Kroger is currently trading at a one-year forward PE (price-to-earnings) ratio of 13.8x, operating closer to the lower end of its 52-week PE range of 13.1x–16.8x.

The company is cheaper than natural and organic food competitors Whole Foods Market (WFM) and Sprouts Farmers Market (SFM), which are trading at 26.8x and 26x, respectively. Kroger’s valuations are also lower than those of Walmart and Costco Wholesale (COST), which are currently trading at 18x and 29x, respectively.

What this series is about

In this seven-part series, we’ll examine Kroger’s financial performance, year-to-date stock market performance, dividend policy, and Wall Street’s view of the company.

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