The firm said it initiated coverage on the food for sale in supermarkets retailer as it believes Kroger will be able to deliver same-store-sales growth.
"We expect Kroger to benefit from continued solid same-store-sales growth of [around] 3% over the next few years, driven by continued focus on innovation, effective marketing, and a stronger economic backdrop," Citigroup said.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
"The same-store-sales leverage, combined with margin enhancing opportunities such as increased private label mix and natural/organic mix, should drive [around] 10% EPS growth over the next three years," Citigroup added.
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 0.5%. Since the same quarter one year prior, revenues rose by 11.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 28.07% and other important driving factors, this stock has surged by 46.33% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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 28.1% 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 ($3.30 versus $2.90).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Food & Staples Retailing industry average. The net income increased by 21.1% when compared to the same quarter one year prior, going from $299.00 million to $362.00 million.
- Net operating cash flow has significantly increased by 136.51% to $719.00 million when compared to the same quarter last year. In addition, KROGER CO has also vastly surpassed the industry average cash flow growth rate of 51.04%.
- You can view the full analysis from the report here: KR Ratings Report