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.
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.
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%.