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Should You Buy Kroger Shares Following Q1 Results?

Briefly –

  • Kroger announced strong Q1 results.
  • The firm’s management revised financial guidance, raising it.
  • CEO Rodney McMullen believes the company expects attractive growth.

Kroger Co. announced stable Q1 earnings this Thursday, though macroeconomic concerns within the broad stock market saw the KR share on an over 7% weekly loss. The company continues to invest in its brand’s quality. Moreover, the management raised monetary guidance for the financial year 2022.

Kroger Raise Financial Guidance

Kroger is the largest supermarket in the United States by revenue and the 2nd-largest retailer behind Walmart. Kroger announced first-quarter outcomes this Thursday. Overall revenue surged by 8% year-on-year to $44.6B, $1.55B beyond expectations. Meanwhile, the non-GAAP returns per share stood at $1.45 ($0.17 beat).

The quarter saw the company traversing a challenging atmosphere comprised of supply chain problems and continued inflationary pressures. Nevertheless, Kroger saw an impressive performance, and management revealed a stable bias in fresh and digital products that propelled trends.

Rodney McMullen, the company CEO, said their team’s relentless focus on offering affordable, fresh food to clients drove the impressive results. He confirmed Kroger is ready to provide top-notch services to clients, invest in company associates, and ensure sustainable shareholder returns.

Moreover, the management raised monetary guidance for this financial year. It expects net sales to increase compared to the previous financial year. The CEO said adjusted returns per share should range from $3.85 – to $3.95 (an uptick from $3.75).

Kroger trades 5-times less TTM EBITDA, and the $35.9 billion market cap means the shares are at a reasonable value. The company generates impressive free cash flow despite escalating inflations. Long-term investors can consider the retailer’s shares.

First Resistance at $50

Kroger stock saw a 20% price decline after hitting the $62.78 high on 8 April 2022. Meanwhile, the current price might represent a lucrative entry-level for long-term traders. A move past $50 will signal a trade. That will reveal $53 as the next target. Meanwhile, losing the stable support at $40 would mean a massive sell sign, opening the gates to $35.

Conclusion

Kroger still invests in its brands’ quality, preserving its attractive price position while driving profitability higher. The company announced strong Q1 earnings on Thursday. Meanwhile, the firm’s share lost 7% within a week due to macroeconomic concerns that slumped the stock market.

 

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