Kroger’s is your one stop consumer products stock – Schaeffers Research | Jewelry Dukan

Steady Eddie wins the race

Grocery chain operator The Kroger Company (NYSE:KR) stock is trading 4.5% higher in 2022, far outperforming tech stocks and benchmark indices. The company operates about 2,800 grocery stores and pharmacies under two dozen banners across the 35 states and also sells fuel through more than 1,600 centers. Grocery has bailed out department stores like Target (NYSE: TGT) and Walmart (NYSE: WMT), and particularly storage giant Costco (NASDAQ: COST). High inflation has held back consumer spending in favor of consumer staples, Dollar General’s (NYSE: DG) earnings show. While they don’t have many special items, the pure consumer goods game is Krogers. They specialize in the two most important consumer goods, food and pharmacy. It’s like owning Target without the clothing and electronics and CVS (NYSE:CVS) without the prices going up and down. They also have a thriving private label business, Our Brands, which guarantees them higher margins and accelerated sales growth. Kroger’s also owns a lot of real estate. Its stock trades at 11.5 times forward earnings and sports a dividend yield of 2.17%, ideal for value investors.

Steady Eddie wins the race

On September 21, 2022, Kroger reported its second quarter 2022 results for the quarter ended July 2022. The company reported earnings of $0.90 per share, beating analysts’ consensus estimate of $0.83 per share by $0.07. Revenue rose 9.3% year-on-year (YoY) to $34.64 billion, beating consensus analyst estimates of $34.44 billion. Identical sales excluding fuel increased by 5.8%. Digital sales increased 8% and identical sales for our brands increased 10.2%. The company increased its dividend on April 16th Consecutive quarter on top of $309 million of share repurchases in the quarter.

Staples are more than stable

Rodney McMullen, CEO of Kroger, commented, “Kroger delivered strong results in the second quarter, driven by our ‘Leading with Fresh’ and ‘Accelerating with Digital’ strategy. We are incredibly grateful for our dedicated staff who continue to deliver a rich, fresh and friendly customer experience. Our consistent performance underscores the resilience and flexibility of our business model, which enables Kroger to thrive in many different operating environments. We use technology and innovation to enhance freshness, grow our brands, and create a seamless shopping experience so our customers get what they want, when and how they want it, without compromising on quality, choice and affordability.”

conservative leadership

Kroger’s issued conservative guidance to be on the safe side. The company reported full-year 2022 earnings per share in a range of $3.90 to $4.05 versus analyst estimates of $3.96. Kroger’s expects full-year identical sales to increase by 4% to 4.5%.

Private label is the growth driver

Kroger’s has developed its own brands, which aren’t just cheaper imitations. In fact, customers prefer their culinary foods and natural/organic brands over national brand names. Its private label posted 10.2% year-over-year growth, almost twice the pace of overall identical grocery sales of 5.8%. They sell over 10,000 products under their own brands including Simple Truth, Private Selection, BLOOM HAUS, Bakery Fresh Goodness and Home Chef. They launched another private label, Smart Way, during the quarter. It’s Our Brands private label products will not win 12 Editor’s Picks Awards for Best New Products in 2022.

Kroger's is your staple consumer staples stock

Attractive pullback levels

Using the Rifle charts on the weekly and daily charts can provide a short-term perspective on the playing field for KR stock. The weekly rifle chart peaked at its profit peak near $52.22 Fibonacci (fib) level. The shares quickly broke through the 5-period weekly moving average (MA) at $49.11, the 15-period MA at $48.15 and the 50-period MA at $48.38. The rising weekly stochastic starts to stagnate at the 50-band. The stock slump fell through the weekly newspaper Market Structure Low (MSL) Buy Triggers at $47.67. The daily rifle chart is attempting a breakdown as stocks tumbled through the daily 200-period MA at $49.73, the 5-period MA at $48.80 and the 15-period MA at $48.79 . Shares fell through the 50-period MA at $47.92 towards the daily lower Bollinger Bands (BBs) at $46.15. Attractive pullback levels are $46.69, $45.69 Fib, $44.31 Fib, $42.93 Fib, $40.97 Fib, $40.18 Fib and the $39.80 Fib level .

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