The Kroger Co. (KR, Financial) will report its first-quarter results before the market opens on Thursday, June 21.
The average analyst predicts Kroger will close the first quarter of 2018 with a net profit of 63 cents per share, which represents an 8.6% growth from the same quarter of fiscal 2017. Twenty-four analysts were surveyed on earnings. The estimates range between a low of 58 cents and a high of 67 cents per share.
Revenue is expected to be $37.33 billion on average. The forecast represents a 2.9% increase from the prior-year quarter. Eighteen analysts were surveyed and estimates range between a low of $36.16 billion and a high of $38.38 billion.
The chart below illustrates the trend in Kroger’s revenues over the last first-quarters.
The chart below illustrates the trend in Kroger’s operating and net income over the last first-quarters:
The following chart portrays the trend in the operating and net margin over the last five years:
KR data by GuruFocus.com
For the trailing 12-months, Kroger has an operating margin of 1.7% versus an industry median of 2.88% and a net margin of 1.55% towards an industry median of 1.97%.
Yearly sales, net income and earnings per share grew on average 5.72%, 6.27% and 10% over the last five years.
Regarding past profitability and Kroger's aim to stay profitable, GuruFocus has ranked the U.S. supermarket chain company with a rating of 7 out of 10.
Kroger’s profitability and growth projected into the coming years demonstrates that yearly sales will grow on average 1.85% over the next three years while annual earnings per share will increase 8.2% from 2018 to 2019 and 7.06% in the next five years.
Kroger has approximately $347 million in cash on hand and securities. Total current assets are valued at $11.12 billion and total current liabilities are $14.2 billion for a current ratio of 0.78. The industry median is 1.2. Kroger's quick ratio is 0.32 versus an industry median of 0.77. The balance sheet has a total debt-equity ratio of 225% versus an industry median of 55%. Kroger is more leveraged than its peers but the interest coverage ratio is 3.48. That means that, despite the high financial burden, the company can easily pay interest expenses on the outstanding debt. GuruFocus gives Kroger an overall financial strength rating of 6 out of 10.
The company generated $3.41 billion in operating cash flow over the past 12 months, of which nearly 83% was used for capital expenditures. The free cash flow from operations amounted to about $600 million. Of that, the company spent $443 million to distribute dividends to shareholders. Kroger has a forward dividend of 50 cents, granting 1.95%. The U.S. supermarket chain company is paying dividends based on 12.5 cents cash quarterly distribution.
Kroger is currently trading around $25.88 per share with a price-earnings ratio of 12.39 versus an industry median of 18.85 times, a price-sales ratio of 0.19 versus an industry median of 0.48 times and a price-book ratio of 3.25 versus an industry median of 1.73 times. The stock has fallen 9% this year and underperformed the S&P 500 index by 11.7%.
The average target price is $22.75. The recommendation rating is 2.2 out of 5.
The share price of Kroger is below the Peter Lynch Earnings Line (P/E = 15) of $31.4 per share and the Price at Med P/E without NRI (P/E = 16.38) of $34.2 per share:
(Disclosure: I don’t have any position neither in Kroger nor in any other security I have mentioned in this article.)
