Wells Fargo expects an in-line third quarter from Kroger Co
Analyst Zachary Fadem expects EPS of $0.42, a penny above Street, with identical supermarket (ID) sales in line with consensus.
Among upcoming positives, Fadem sees modest margin potential from productivity initiatives, improvement in industry and company-specific
Looking ahead to fourth quarter, the analyst believes the consensus ID sales estimate of +1.3 percent appears achievable absent further deterioration in the operating environment.
“While competition remains acute, our cheeks suggest the more aggressive promo activity seen in Q3 is subsiding, and KR laps a year-ago quarter negatively impacted by weather (which could present a tailwind in FY16),” Fadem wrote in a note.
Fadem says FY 2017 looks more promising for Kroger as well as grocery industry in general, driven by a potential return of fuel/food inflation. Further, the company should benefit from lower U.S.
“On a macro level, uncertainty remains, but should the U.S. enter a period of rising interest rates. improving GDP and consumer spending, we see KR well-positioned heading into FY17,” Fadem added.
At last check, shares of Kroger fell 1.22 percent to $33.25, with Fadem having a valuation range between $37 and $38.
|Sep 2016||Barclays||Initiates Coverage on||Equal-Weight|
© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.