Kroger (KR) - Bull Of The Day

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Kroger (KR) - Bull Of The Day

By Zacks Investment Research on March 11, 2009 | More Posts By Zacks Investment Research | Author's Website

Kroger (KR) reported fourth quarter EPS of $0.53, which was $0.01 ahead of our estimate and the consensus.

Revenue was $17.3 billion, well below our forecast of $18.4 billion. The revenue shortfall was due to the drop in gasoline prices. Excluding fuel sales at the company’s supermarket fuel centers and convenience stores, total sales increased 4.4% over the prior-year quarter.

For fiscal year 2009 ending Jan 2010, Kroger expects identical-store sales of 3% to 4% and earnings per share of $2.00 to $2.05. We think the company is being conservative, which is prudent in this difficult economic environment.

We believe the company will be able to beat its fiscal year 2009 EPS guidance, due to a higher mix of private-label brand sales and continued market share gains. We reiterate our Buy rating on Kroger shares and six-month target price is $25, or 12x our fiscal year 2009 EPS estimate.

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