Kroger (KR) Stock Rising on Dividend Hike, Stock Split

NEW YORK (TheStreet) -- Shares of Kroger Co. (KR) are higher by 1.23% to $73.84 in early afternoon trading on Thursday, after the consumer goods and services company announced a 13.5% quarterly dividend increase and a 2-for-1 stock split.

"Today's actions reflect our board of directors' confidence in Kroger's long-term performance and ability to deliver growth consistently to our investors," Kroger CEO Rodney McMullen said in a statement.

This is Kroger's fifth stock split. Previously the stock split in 1979, 1986, 1997, and 1999.

"The stock split will increase the accessibility of our shares and liquidity in the trading of our shares. We are especially excited that the stock split will make Kroger's common shares more accessible to all of our associates," McMullen continued.

Kroger also announced a $500 million share repurchase program.

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:

  • KR's revenue growth has slightly outpaced the industry average of 5.0%. Since the same quarter one year prior, revenues slightly increased by 0.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 27.55% and other important driving factors, this stock has surged by 55.57% 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 27.6% 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 ($3.87 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 23.6% when compared to the same quarter one year prior, going from $501.00 million to $619.00 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. 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.
  • You can view the full analysis from the report here: KR Ratings Report

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