Why Kroger Stock Is Down By 9% Today
Kroger Stock Falls As Q2 Report Misses Traders’ Expectations
Shares of Kroger found themselves under strong pressure after the company released its second-quarter results. Kroger reported revenue of $31.68 billion and GAAP earnings of $0.61 per share, beating analyst estimates on revenue and missing them on earnings.
The company has also raised its full-year guidnance and expects to report adjusted earnings of $3.25 – $3.35 per share. This guidance exceeds analyst expectations for the current year. Currently, analysts expect that Kroger will report earnings of $3.06 per share this year and $3.07 per share in the next year, so the stock is trading at less than 14 forward P/E.
While Kroger’s full-year earnings guidance was higher than analyst expectations, the market has clearly wanted to see more evidence of longer-term sustainable growth.
What’s Next For Kroger Stock?
Kroger stock experienced several one-day sell-offs in 2021, but traders were always very quick to buy the stock at a discount. Current valuation levels look normal for the current market environment, and the key question is whether traders see enough growth potential for the company.
At the first glance, the current sell-off looks like overreaction from market players. The company’s results were decent, and Kroger raised its guidance for this year. Perhaps, too many traders bought the stock ahead of earnings hoping to see blockbuster results, so an ordinary report, which missed analyst estimates on GAAP earnings but beat them on adjusted earnings, has suddenly served as a bearish catalyst.
In my opinion, Kroger stock has a good chance to rebound from current levels in the upcoming trading sessions as an instant 9% discount with no significant negative catalysts is rarely provided in the current market environment. Unless there is a broad market sell-off, speculative traders and value-oriented investors will likely provide more support to Kroger stock in the upcoming weeks.
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