Jim Cramer Says Kroger (KR) Is Firing on All Cylinders; Stock Rising Following Earnings Release

NEW YORK (TheStreet) -- Shares of Kroger Co  (KR) were rising, up 1.43% to $73.95 in mid-morning trading Thursday, after the grocery chain operator reported better than expected first quarter profit this morning.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio says, "These guys are firing on all cylinders. They have almost twice the growth of a Whole Foods (WFM) with a much lower price to earnings multiple."

"While the stock's had a big move, it is still relatively inexpensive. Their natural and organic initiatives, as well as their private label products, have driven sales and earnings and the company is the best operator in the business," Cramer added.

The company's earnings beat reflected improved operating margins and sales growth. Still, quarterly revenue slightly missed analysts' estimates.

For the first quarter, the grocery retailer earned $1.25 per share on revenue of $33.05 billion.

Analysts polled by Thomson Reuters expected the company to report earnings of $1.22 per share on revenue of $33.34 billion for the quarter.

"We are managing through a volatile operating environment, with fuel margins normalizing compared to last year's record highs, inflation in some commodities and deflation in others," Kroger chairman and CEO Rodney McMullen said in a statement.

Looking ahead, the company kept its earnings forecast for 2015, but increased its annual comparable sales guidance.

For fiscal year 2015, Kroger expects earnings in a range of between $3.80 to $3.90 per share, compared to the consensus estimate of $3.87 per share.

The company forecasts identical supermarket sales growth excluding fuel, of between 3.5% to 4.5%, up from its prior forecast of between 3% to 4%. 

Cincinnati, Ohio-based Kroger is a traditional grocery retailer that operates under the Kroger, Ralphs, Fred Meyer, Food 4 Less, Fry's, King Soopers, Smith's, and Dillons brands. 

Kroger operates retail food and drug stores, multi-department stores, jewelry stores, and convenience stores.

It also manufactures and processes some of the food for sale in its supermarkets.

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, notable return on equity, good cash flow from operations, solid stock price performance and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

You can view the full analysis from the report here: KR Ratings Report

KR ChartKR data by YCharts

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