Why Kroger (KR) Stock Continues To Improve This Afternoon

NEW YORK (TheStreet) -- Shares of The Kroger Co. (KR) are higher by 5.37% to $49.81 on heavy trading volume Thursday afternoon.

The stock has continued to climb following the retail company's 2014 first quarter financial results which showed net income rose to $501 million, or 98 cents per share, compared to $481 million, or 92 cents per share for the year ago quarter.

Total sales increased 9.9% to $32.96 billion for the most recent quarter versus $30 billion from the 2013 first quarter.

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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 solid stock price performance and notable return on equity. 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:

  • Compared to its closing price of one year ago, KR's share price has jumped by 37.72%, exceeding the performance of the broader market during that same time frame. 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's earnings per share declined by 8.0% in the most recent quarter compared to the same quarter a year ago. 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 $2.90 versus $2.77 in the prior year. This year, the market expects an improvement in earnings ($3.22 versus $2.90).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.5%. Since the same quarter one year prior, revenues slightly dropped by 3.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. 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.
  • The change in net income 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 has decreased by 8.7% when compared to the same quarter one year ago, dropping from $462.00 million to $422.00 million.
  • You can view the full analysis from the report here: KR Ratings Report
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