Is Kroger (KR) Set to Top Earnings Estimates?


By now, nearly every investor knows that Amazon AMZN has shaken up the grocery industry, along with almost every other sector of the retail business. Grocery chains and big-box giants have, however, fought back.

Walmart WMT and Target TGT added new trendy offerings, committed more to remodels than new locations, and focused on improving their online sales and delivery capabilities. Grocery power Kroger KR, which boasts 2,793 retail food stores under a variety of banners, has also set out to revamp its business model to better compete going forward.

The company recently started its “Restock Kroger” initiative. Kroger hopes to accelerate its digital and ecommerce offerings as part of this new push. Kroger has already made a few noteworthy moves, one of the biggest being the grocer’s partnership with grocery delivery startup Instacart.

But investors likely want to know if these moves are set to pay off in the company’s upcoming fourth quarter earnings report.

Kroger’s Q4 sales are projected to surge by 11.7% to hit $30.84 billion. Meanwhile, Kroger’s earnings are expected to reach $0.62 per share, which would mark a nearly 17% climb from the year-ago period.   

Furthermore, the Cincinnati-based grocery firm topped EPS estimates by 10% last quarter. Still, investors need to gauge if Kroger is expected to beat earnings estimates in Q4.

Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to beat. Zacks Earnings ESP (Expected Surprise Prediction) looks to find earnings surprises by focusing on the most recent analyst estimates.

This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

Kroger is currently a Zacks Rank #3 (Hold) and boasts an overall “B” VGM score. Coupled with the company’s current Earnings ESP of 1.40%, which signals that earnings estimates have been higher directly ahead of Kroger’s upcoming fourth-quarter results, investors should consider the stock as one that seems poised to beat earnings estimates.

Kroger is set to report its fourth quarter and fiscal 2017 earnings results before the market opens on Thursday, March 8.

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