The Kroger Co. (KR): Insiders Smell A Bargain?

The Kroger Co. (NYSE:KR) is rated as Market Perform by analysts at Telsey Advisory Group. The firm was pushed by the stock performance to change their PT view from $31 to $29 on March 08. Analysts at Pivotal Research Group, maintained the company shares at Hold on March 08 but switched target price from $31 to $26. Analysts at Buckingham Research, made their first call about the stock on February 08, recommending it is Underperform. BofA/Merrill, reiterated their call for Buy, on December 07. On the other hand, they had set new target price to $37 versus $35.

KR stock rose 0.08% in recent trade and currently has a stock-market value of $20.66B. The shares finished at $24.75, after trading as low as $24.65 earlier in the session. It hit an intraday high Thursday at $24.98. Trading activity significantly weakened as the volume at ready counter decreased to 8,678,582 shares versus 11,369,245 in average daily trading volume over the past 20 days. So far this year, the volume has averaged about 8,173,886 shares. The stock is now 7.38% above against its bear-market low of $23.05 on March 22, 2018. It has retreated -32.28% since it’s 52-week high of $32.74 reached in September. Now the market price is up 3.08% on the year and down -10% YTD.

Wall Street’s most bullish The Kroger Co. (NYSE:KR) analysts are predicting the share price to blow past $37 per share during the next 12 months. The current median share price forecast by them is $28.5, suggesting that the stock could increase 15.15% in that time frame. The average price target of $28.46 calls for a nearly 14.99% increase in the stock price.

The Kroger Co. (KR)’s 50 day simple moving average (SMA 50) price is $28.07 and its 200-day simple moving average (SMA 200) price is $28.7. The company’s stock currently has a total float of 792.68M shares. Its weekly volatility is hovering around 2.81% and felt 2.79% volatility in price over a month. On the upside, the share price will test short term resistance at around $24.94. On a downside, the stock is likely to find some support, which begins at $24.61. The failure to get near-term support could push it to $24.46.

When looking at valuations, The Kroger Co. (KR) has a cheap P/E of 7.51x as compared to industry average of 37.02x. Moreover, it trades for 10.38 times the next 12 months of expected earnings. Also, it is trading at rather expensive levels at just over 2.58x price/book and 0.17x price/sales. Compared to others, The Kroger Co. is in a different league with regards to profitability, having net margins of 3%. To put some perspective around this, the industry’s average net margin is 3.11%. KR’s ROE is 51.8%, which is also considerably better than the industry’s ROE of 10.07%. It’s also not liquid in the near term, with a current ratio of 0.7. The stock has a debt/capital of 1.96.

Shares of KR have dropped -13% since the company’s most recent earnings report. Over the past 12 fiscal quarters, The Kroger Co. (NYSE:KR) has topped consensus earnings estimates in 7 quarters (58%), missed earnings in 3 quarters (25%), whereas at 2 occasion EPS met analyst expectations. KR last reported earnings that receded expectations. The company raked in $0.48 per share, -94.26% change on the same period last year. That was worse than consensus for $0.52. Revenue for the recent quarter stood at $28.09 billion, down -9% on last year and below the $28.38 billion predicted by analysts. For this quarter, Wall Street analysts forecast revenue in a range of $36.57 billion to $38.77 billion, which should be compared with $38.65 billion generated last year.