Kroger (NYSE:KR) Stock: Will The Earnings Beat Streak Continue in Q2?

Ohio-based supermarket chain Kroger Co. (NYSE:KR) is scheduled to release the second-quarter 2022 results on September 9 before the opening bell. The company boasts a stupendous record of beating earnings estimates. Kroger has successfully delivered an earnings surprise in all the trailing quarters in the last couple of years. In the upcoming second quarter, the supermarket chain is expected to continue seeing support from its strategies to increase the freshness, quality, and affordability of its products along with widening digital capabilities.

Let’s take a look at the consensus expectations and the factors that might have influenced the results in the second quarter.

Consensus Estimates for Q2 are Mixed

For the second quarter of 2022, the consensus estimate for Kroger’s earnings is pegged at 80 cents per share, at par with the year-ago period’s figure.

Meanwhile, the consensus estimate for the company’s revenues stands at $34.35 billion, higher than the previous year’s tally of $31.68 billion.

Key Growth Catalysts for Q2

Kroger is focussing on strengthening its competitive moat, which translated into robust growth in the identical sales in the company’s Fresh Department and Our Brands categories.

The company has widened its End-to-End Fresh Produce program and gave certifications to 355 new stores during the last reported quarter. These efforts should retain the growth momentum in the new categories. Moreover, the launch of 239 new items under Our Brands in the first quarter should provide support to the top line in the second quarter.

Further, Kroger is undertaking initiatives to accelerate digital growth. These efforts include improvised personalization capabilities, Kroger Boost membership, growing customer fulfillment centers, and Kroger Delivery Now service. On the back of these initiatives, the number of digitally engaged households rose by more than half a million in the first quarter. Moreover, digital coupon downloads saw a double-digit jump. The second quarter of 2022 should also witness the trend.

Website Traffic Trends Reflect a Strong Q2

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into the possible impact of consumer behavior on Alibaba’s financials and stock performance.

According to TipRanks’ Website Traffic Tool, Kroger’s websites — kroger.com and thekrogerco.com — recorded a 133.6% surge in global visits in the quarter-to-date (May-July) period. Learn how Website Traffic can help you research your favorite stocks.

Is Kroger Stock a Buy, Sell or Hold?

Analysts have mixed feelings about Kroger stock. According to TipRanks, Street is neutral about the KR stock, which carries a Hold consensus rating based on three Buys, seven Holds, and three Sells. Further, hedge funds look apprehensive about KR stock, as they have sold 4.1 million shares of KR stock in the last quarter.

Meanwhile, financial bloggers and retail investors look bullish about the KR stock. Financial bloggers’ opinions are 93% Bullish on KR stock, above the sector average of 64%. According to the TipRanks tool, KR stock carries a Smart Score of 8 out of 10 which highlights its ability to outperform.

Finally, Kroger’s shares have risen 11.8% so far in 2022. Also, KR stock’s average price target of $54.22, signals an 8.8% upside potential from its current level.

Final Thoughts

Kroger’s shares can receive further support if the company manages to maintain the earnings beat trend once again. Instilling optimism, it has already raised the full-year 2022 guidance on the back of strong first-quarter results and continued food-at-home trends. The company is also managing costs very efficiently, which should provide support to the financials. Notably, Kroger is on track to witness $1 billion in cost savings in 2022 for the fifth straight year.

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