17 Sep

No Rating Changes for Kroger for Now

WRITTEN BY Sonya Bells

Analysts’ reactions to Kroger’s Q2 results

Analysts’ ratings for Kroger (KR) were unchanged after its Q2 results release, and it has stayed at 2.4 on a scale of 1 (“strong buy”) to 5 (“sell”). However, Credit Suisse cut the company’s price target from $33 to $32. Walmart’s (WMT), Costco’s (COST), and Target’s (TGT) ratings are 2.4, 2.0, and 2.7, respectively.

Of the 26 analysts covering Kroger, 38% (including Jefferies and Credit Suisse analysts) recommend “buy,” 58% (including Pivotal Research, Telsey Advisory, and Morgan Stanley analysts) recommend “hold,” and 4% recommend “sell.” Walmart, Costco, and SuperValu do not have any “sell” recommendations.

No Rating Changes for Kroger for Now

Analysts’ price target for Kroger

Kroger is currently trading at $27.80, ~18% below its 52-week high. Analysts expect the stock to bounce back, returning 11% over the next 12 months and reaching $30.86. Their target prices for the stock range between $24 and $36.

In comparison, analysts expect Walmart, Costco, and Target stock to rise 10%, 3%, and 1%, respectively. Costco and Target are trading around their 52-week highs.

Comparing valuation

Kroger is currently trading at a one-year forward PE ratio of 12.8x, and its three-year average is 14.4x. It trades at a discount to most peers—mass-merchandisers Walmart, Costco, and Target have PE ratios of 20.2x, 31.2x, and 15.8x, respectively.

Kroger’s near-term earnings potential is also expected to be lower. Kroger’s earnings are projected to decline ~1.8% over the next 12 months, while Costco’s and Target’s are expected to rise 15% and 9.5%, respectively. Walmart’s earnings are expected to fall 1.5%.

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