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TheStreet Open House

Why Kroger (KR) Is Up Today

NEW YORK (TheStreet) -- Kroger (KR) announced Tuesday that is acquired digital coupon company YOU Technology.

Shares of Kroger gained 1.5% to $36.72.

YOU Tech currently provides digital coupon and promotion solutions for a variety of brands and retailers, including Kroger. The company will continue to serve its partners following the acquisition, and will continue to take on new customers. The deal closed Tuesday, though no financial terms were announced.

"This is a good strategic fit for both Kroger and YOU Tech. This transaction is consistent with our digital customer growth plan and provides Kroger a significant opportunity to expand our presence in Silicon Valley, enhancing our exposure to new technologies," Kroger vice president of customer loyalty Jall Tablot said in a press release.

Must read: How Lousy Weather Could Affect Whole Foods Even More

TheStreet Ratings team rates KROGER CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate KROGER CO (KR) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • KR's revenue growth has slightly outpaced the industry average of 6.7%. Since the same quarter one year prior, revenues slightly increased by 3.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, KR's share price has jumped by 31.94%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Food & Staples Retailing industry and the overall market, KROGER CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $304.00 million or 29.36% when compared to the same quarter last year. In addition, KROGER CO has also vastly surpassed the industry average cash flow growth rate of -48.19%.
  • KROGER CO' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, KROGER CO increased its bottom line by earning $2.77 versus $0.95 in the prior year. This year, the market expects an improvement in earnings ($2.79 versus $2.77).
  • You can view the full analysis from the report here: KR Ratings Report

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