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The Kroger Co. (KR) is one of the largest grocery retailers in the U.S. It operates 2,477 supermarkets and multi-department stores in 31 states under approximately 24 local banners, including Kroger, Ralphs, Fred Meyer, Food 4 Less, King Soopers, Smith's, Fry's and Fry's Marketplace, to name but a few.
Kroger's third quarter results were slightly better than our expectations. Sales matched our forecast, while its EPS beat by $0.01, excluding a one-time charge of $0.03 related to Hurricane Ike. What's more, management raised its full-year EPS guidance from $1.85-$1.90 to $1.88-$1.91.
We think Kroger shares are attractively priced at these levels and view this entry point as buying opportunity. Kroger's low prices and private-label brands continue to help the company take market share from competitors, and its cost controls are helping offset gross margin declines.
All told, we maintain our Buy rating and target price of $32, which is 15x our fiscal 2009 EPS estimate.
Read the full analyst report on KR
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