Will The Kroger Co. (KR) Beat Earnings?


We expect The Kroger Co. (KR) — retail food and multi-department store operator— to beat expectations when it reports third-quarter fiscal 2013 results on Dec 5, 2013.

Why a Likely Positive Surprise?

Our proven model shows that Kroger is likely to beat earnings because it has the right combination of two key components.

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Positive Zacks ESP: Kroger currently has an Earnings ESP of +1.89%. This is because the Most Accurate estimate stands at 54 cents, while the Zacks Consensus Estimate is pegged at 53 cents.

Zacks Rank #3 (Hold): Note that stocks with a Zacks Ranks of #1, #2 and #3 have a significantly higher chance of beating earnings estimates. The sell-rated stocks (Zacks Rank #4 and #5) should never be considered going into an earnings announcement.

The combination of Kroger’s Zacks Rank #3 (Hold) and +1.89% ESP makes us very confident regarding a positive earnings beat on Dec 5.

What is Driving the Better-than-Expected Earnings?     

A dominant position among the nation’s largest grocery retailers enables Kroger to sustain growth in both its top and bottom line, expand its store base, and boost its market share. The company’s strong corporate and national brands helped it gain customer loyalty. These factors, along with the Customer 1st strategy and effective cost management may help the company to post better-than-expected results in the quarter. The company in the last four quarters has outperformed the Zacks Consensus Estimate by an average of 9.7%.

Stocks that Warrant a Look

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:

Five Below, Inc. (FIVE) has an Earnings ESP of +25.00% and a Zacks Rank #2 (Buy).

American Eagle Outfitters, Inc. (AEO) has an Earnings ESP of +5.56% and a Zacks Rank #3 (Hold).

Rite Aid Corporation (RAD) has an Earnings ESP of +25.00% and a Zacks Rank #3 (Hold).

AMER EAGLE OUTF (AEO): Free Stock Analysis Report

FIVE BELOW INC (FIVE): Free Stock Analysis Report

KROGER CO (KR): Free Stock Analysis Report

RITE AID CORP (RAD): Free Stock Analysis Report

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