Kroger operates retail food and drug stores, multi-department stores, jewelry stores, and convenience stores throughout the U.S.
Barclays maintained its "equal weight" rating and a price target of $75 on the stock.
The competitive environment for retailers remains rational, so Kroger has been able to invest in areas like training and store labor rather than price and promotion, according to the analyst note.
"Sales of natural and organic products remain strong and margins are healthy, and we believe that healthy eating remains a growing mainstream trend," Barclays analysts said.
Kroger reported first quarter earnings results yesterday with revenue of $33.05 billion, or $1.25 earnings per share. For more on its earnings, click here
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."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 5.6%. Since the same quarter one year prior, revenues slightly increased by 8.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 28.39% and other important driving factors, this stock has surged by 49.51% 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 28.4% 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 $3.45 versus $2.90 in the prior year. This year, the market expects an improvement in earnings ($3.86 versus $3.45).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food & Staples Retailing industry. The net income increased by 22.7% when compared to the same quarter one year prior, going from $422.00 million to $518.00 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Food & Staples Retailing industry and the overall market, KROGER CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- You can view the full analysis from the report here: KR Ratings Report