Kroger's Second-Quarter Earnings Preview: What Wall Street's Saying

NEW YORK (TheStreet) - Wall Street is expecting good things when grocery chain, Kroger (KR) , reports fiscal second quarter results on Thursday.

The Cincinnati-based company, which labels itself as the nation's largest grocery retailer, is expected to report earnings of 69 cents a share on revenue of $2.49 billion for the July-ending quarter, according to Thomson Reuters. Same store sales are expected to rise 4.2% for the quarter, according to Consensus Metrix.

The company has been expanding its reach and most recently looking to expand online and into the growing natural products category, which will pit it against Whole Foods (WFM) . In July, Kroger agreed to acquire, an online retailer of vitamins and other nutritional products, for $280 million in cash.

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Last week, Kroger said it plans to hire an additional 20,000 employees to fill permanent positions in its supermarket division. Kroger operates approximately 2,640 supermarkets and department stores in 34 states under brands including Kroger, City Market, Dillons, Food 4 Less, Fred Meyer, Fry's, Harris Teeter, Jay C, King Soopers, QFC, Ralphs and Smith's, the company says. It also operates 786 convenience stores, 320 fine jewelry stores, 1,240 supermarket fuel centers and 37 food processing plants in the U.S.

Shares are up 38% over the past 12 months and rose an additional 0.25% to $51.87 on Wednesday. Here's what analysts are saying leading into earnings.

Ajay Jain, Cantor Fitzgerald (Hold; $47 PT)

With Kroger set to report 2Q earnings on Thursday 9/11, we think the stars are aligned from an operational standpoint. The Harris Teeter transaction is off to an excellent start, in our view, and based on the quality of earnings beat in 1Q, we believe Kroger continues to execute at a very high level. The recently updated guidance could still be potentially conservative, in our view. We do think, however, that the inflation outlook is worth staying on top of heading into 2H.

With the stock up 42% over the past 12 months, the stock reflects a very strong outlook and potential for market share gains amid continued industry consolidation, in our view. With KR trading at a 25-30% premium to its five-year historical average, we think the valuation is full.

Read More: Kroger Bags Vitacost for $280M

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