After an upgrade from Bernstein, Kroger (KR) was trading higher today. As of 1:40 PM ET, the stock was trading 1.2% higher than yesterday’s closing price. However, year-to-date, the company’s stock price has fallen 12.5% as of May 20. The lower-than-expected fourth-quarter earnings led to a fall in the stock price. Read more about Kroger’s fourth-quarter earnings in Kroger’s 2019 Outlook Dragged Its Stock Down.
Kroger has been lagging behind the broader equity market this year, with the S&P 500 Index returning 13.3% during the same period. Also, Kroger’s peers Walmart (WMT), Target (TGT), and Costco (COST) have returned 9.0%, 9.1%, and 22.2%, respectively.
The weak fourth-quarter earnings have lowered Kroger’s stock price and valuation multiple. As of May 20, the company was trading at a forward PE multiple of 10.7x, compared to 12.2x at the beginning of this year. On the same day, its peers Walmart, Target, and Costco were trading at forward PE multiples of 20.8x, 12.1x, and 33.0x, respectively. Soft sales and lower margins have led Kroger to trade at a lower valuation multiple than its peers.
Also, on May 20, Kroger was trading at 11.0 times analysts’ 2019 EPS estimate of $2.19 and 10.1 times analysts’ 2020 EPS estimate of 10.10. The company’s EPS are expected to grow 3.8% in 2019 and 8.8% in 2020.