Shares of The Kroger Co. (KR) touched a 52-week high of $66.69 on Jan 13, 2015 before eventually closing at $66. We note that the company's share price has been rising consistently, delivering an impressive growth of 69.2% year over year.
The stock has been performing well, riding on its strategy of driving long-term growth through acquisitions and expansions, efforts to include new products in its stores and customer-centric business model.
Kroger’s dominant position among the nation’s largest grocery retailers enables it to sustain growth, expand its store base and boost market share by introducing new items. The company had launched about 937 new products in fiscal 2013. Further, the company’s strong corporate and national brands help it in gaining customers loyalty.
This Zacks Rank #2 (Buy) company is positioned superiorly than its rivals due to its Customer 1st strategy which enriches consumers’ shopping experience and convinces them to return to its stores. We expect this strategy to help the company in sustaining its earnings growth momentum.
A look at the company’s earnings surprise history reveals that it has outpaced the Zacks Consensus Estimate in the last three quarters with an average beat of 6.1%.
Further, given Kroger’s strong identical-store sales growth for about 44 successive quarters and better-than-expected bottom-line performance, we believe the company is poised to achieve its targeted long-term earnings per share growth rate of 8% to 11%.
We also remain optimistic about the company’s long-term growth owing to its strategic acquisitions of Harris Teeter Supermarkets and Vitacost.com. These acquisitions will cater to the demands of online shoppers while boosting sales and expanding the company’s global presence.
Contribution of Harris Teeter in Kroger’s performance is evident from the recently reported third-quarter fiscal 2014 results, wherein the company posted 11.2% growth in total revenue.
On account of these factors, this Target Corp. (TGT) rival appears to be a promising stock as it has enormous opportunities to augment identical supermarket sales, alleviate gross margin pressure, improve operating margin and enhance return on invested capital. Management continues to deploy capital to concentrate more on remodeling, merchandising and other viable projects.
Apart from Kroger, The Clorox Company (CLX) and Leggett & Platt Incorporated (LEG) also hit 52-week highs of $107.89 and $45.79 respectively, on Jan 13.
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