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Kroger Looks Like A Sell

Kroger (KR) shares have had a fantastic run, rising 250% since 2012. Kroger has grown revenue and earnings during this period (EPS grew from $2.73 in 2012 to an estimated $3.39 for 2014), the company has also seen its P/E multiple expand significantly. While shares traded at a measly 8x earnings in 2012, today shares are trading hands at a whopping 19x 2015 estimated earnings. This is significantly higher than where US grocers have traded over the past decade (have ranged from 8-14x). In addition, analysts are now expecting Kroger to grow EPS by 8-11% per year for the next few years. This is a far cry from the 1-3% investors were expecting back in 2012. Are Kroger's business prospects that much better? I expect not. Today I will highlight why I think it is time to sell Kroger shares.

Back in 2012, the market was very pessimistic about the… Read More …