NEW YORK (TheStreet) -- The Kroger Co's (KR) "buy" rating was reiterated by analysts at Argus Research this morning based on the company's announcement that it agreed to purchase the online retailer of health and wellness products Vitacost.com (VITC) for $280 million.
Kroger, a food retailer, said the merger will help the company expand into a new market as Vitacost.com brings to the company a strong position as one of the largest pure ecommerce companies in the nutrition and healthy living market.
The transaction is expected to close in the 2014 third quarter.
Must Read: Warren Buffett's 25 Favorite Stocks
Shares of Kroger are up 0.51% to $49.68 at the start of trading on Thursday. Separately, 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, solid stock price performance, growth in earnings per share, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated." Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.0%. Since the same quarter one year prior, revenues slightly increased by 9.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 43.24% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, KR should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- KROGER CO has improved earnings per share by 6.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, KROGER CO increased its bottom line by earning $2.90 versus $2.77 in the prior year. This year, the market expects an improvement in earnings ($3.28 versus $2.90).
- The net income growth from the same quarter one year ago has exceeded that of the Food & Staples Retailing industry average, but is less than that of the S&P 500. The net income increased by 4.2% when compared to the same quarter one year prior, going from $481.00 million to $501.00 million.
- Net operating cash flow has increased to $1,780.00 million or 10.08% when compared to the same quarter last year. Despite an increase in cash flow, KROGER CO's average is still marginally south of the industry average growth rate of 12.36%.
- You can view the full analysis from the report here: KR Ratings Report
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV