The Kroger Co. (KR) Clearly Signals Buy-Into the Stock: Don’t ignore the signals

The Kroger Co. (NYSE: KR) stock fell -3.52% on Friday to $45.27 against a previous-day closing price of $46.92. With 6.2 million shares changed hands, the volume of the stock remained heavier than its average volume of 5.5 million shares. During the session, the Grocery Stores company that operates in wider Consumer Defensive sector, reached to the highest price of $47.15 whereas the lowest price it dropped to was $45.27. The 52-week range on KR shows that it touched its highest point at $62.78 and its lowest point at $38.22 during that stretch. It currently has a 1-year price target of $54.97. With its current market cap of 32.82 billion, KR has annualized dividend of $1.04 while the current yield stands at 2.30%. Beta for the stock currently stands at 0.47.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of KR was down-trending over the past week, with a drop of -7.50%, but this was down by -9.68% over a month. Three-month performance dropped to -4.37% while six-month performance fell -19.98%. The stock gained 11.92% in the past year, while it has gained 0.02% so far this year. A look at the trailing 12-month EPS for KR yields 2.18 with Next year EPS estimates of 4.14. For the next quarter, that number is 0.81. This implies an EPS growth rate of -33.60% for this year and 2.47% for next year. EPS is expected to grow by 11.65% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 1.20%.

Float and Shares Shorts:

At present, 722.00 million KR shares are outstanding with a float of 711.25 million shares on hand for trading. On Jul 14, 2022, short shares totaled 23.16 million, which was 3.24% higher than short shares on Jun 14, 2022. In addition to Mr. William Rodney McMullen as the firm’s Chairman & CEO, Mr. Gary Millerchip serves as its Sr. VP & CFO.

Institutional Ownership:

Through their ownership of 82.71% of KR’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 42.15% of KR, in contrast to 39.45% held by mutual funds. Shares owned by individuals account for 2.45%. As the largest shareholder in KR with 10.92% of the stake, The Vanguard Group, Inc. holds 78,154,208 shares worth 78,154,208. A second-largest stockholder of KR, Berkshire Hathaway, Inc., holds 52,437,295 shares, controlling over 7.33% of the firm’s shares. BlackRock Fund Advisors is the third largest shareholder in KR, holding 43,775,614 shares or 6.12% stake. With a 2.69% stake in KR, the Vanguard Total Stock Market Index is the largest stakeholder. A total of 19,232,757 shares are owned by the mutual fund manager. The Vanguard Mid Cap Index Fund, which owns about 2.08% of KR stock, is the second-largest Mutual Fund holder. It holds 14,896,246 shares valued at 714.13 million. Vanguard 500 Index Fund holds 1.91% of the stake in KR, owning 13,638,826 shares worth 653.85 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for KR since 26 analysts follow the stock currently. There are 7 analysts who recommend BUY ratings, while 4 suggest SELL ratings. Of the remaining analysts, 14 believe that the stock is worth HOLDING, 0 give it an OVERWEIGHT rating, and 1 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With KR analysts setting a high price target of $75.00 and a low target of $43.00, the average target price over the next 12 months is $55.13. Based on these targets, KR could surge 65.67% to reach the target high and fall by -5.01% to reach the target low. Reaching the average price target will result in a growth of 21.78% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. KR will report FY 2023 earnings on 03/02/2023. Analysts have provided yearly estimates in a range of $4.40 being high and $3.57 being low. For KR, this leads to a yearly average estimate of $4.04. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. The Kroger Co. surprised analysts by $0.08 when it reported $0.90 EPS against a consensus estimate of $0.82. The surprise factor in the prior quarter was $0.16. Based on analyst estimates, the high estimate for the next quarter is $0.99 and the low estimate is $0.75. The average estimate for the next quarter is thus $0.81.

Summary of Insider Activity:

Insiders traded KR stock several times over the past three months with 10 Buys and 16 Sells. In these transactions, 38,870 shares were bought while 53,413 shares were sold. The number of buy transactions has increased to 67 while that of sell transactions has risen to 93 over the past year. The total number of shares bought during that period was 1,662,685 while 1,481,837 shares were sold.

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