Why Kroger Stock Is Up By 12% Today
Kroger Stock Rallies After Strong Quarterly Report
Shares of Kroger gained strong upside momentum after the company reported its third-quarter results. Kroger reported revenue of $31.9 billion and adjusted earnings of $0.78 per share, beating analyst estimates on both earnings and revenue.
Kroger stated that food at home trends remained strong and announced that it raised the full-year guidance. The company expects to report adjusted earnings of $3.40 – $3.50 this year. Kroger added that it believed that business was well positioned to grow beyond 2021.
The market clearly agrees with Kroger as the stock is up by more than 10% today. It should be noted that the stock has been under pressure in September and early October after the company’s CEO stated that supply chain problems and organized crime put pressure on company’s margins. However, the third-quarter report indicated that the company was in a good shape, so traders rushed to buy Kroger shares.
What’s Next For Kroger Stock?
Currently, analysts expect that Kroger will report earnings of $3.34 per share this year, so the company’s new guidance, which calls for earnings of $3.40 – $3.50 per share, exceeds analyst estimates. In the next year, Kroger is expected to report earnings of $3.25 per share, so the stock is trading at 14 forward P/E. However, analyst estimates may move higher after the solid quarterly report.
In the near term, Kroger stock dynamics will also depend on the market’s evaluation of Omicron’s impact on the economy. In addition, worries about the impact of inflation may also influence Kroger stock.
Consumers seem willing to accept higher prices, especially if concerns over the spread of Omicron shift demand from services to physical goods. In this scenario, grocery stocks could get additional support, and Kroger stock will have a good chance to get closer to yearly highs near the $48 level.
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