Core Viewpoint - The article emphasizes a fundamentals-based approach to value investing, arguing against the misconception that low multiple stocks are inherently cheap, and highlights the importance of long-term growth and a strong balance sheet in investment decisions [1]. Group 1: Investment Philosophy - The company seeks to identify firms that provide long-term durability at affordable prices, focusing on those with steady growth and no cyclicality [1]. - There is an acknowledgment of the risks involved in investing in successful companies, particularly the potential to overpay, which underscores the significance of valuation [1]. - The article suggests that in certain situations, the potential for growth may outweigh immediate price concerns, indicating a broader perspective on investment timing [1].

Company Performance - Kroger's stock closed at $71.39, reflecting a -1.15% change from the previous day's closing price, underperforming the S&P 500's loss of 0.01% [1] - Prior to the recent trading session, Kroger's shares had increased by 10.23%, outperforming the Retail-Wholesale sector's gain of 3.27% and the S&P 500's gain of 5.37% [1] Earnings Forecast - Kroger is expected to report an EPS of $0.99, indicating a growth of 6.45% compared to the same quarter last year [2] - The consensus estimate for quarterly revenue is $34.07 billion, which represents a 0.47% increase from the year-ago period [2] Full-Year Estimates - The Zacks Consensus Estimates for Kroger's full-year earnings are projected at $4.76 per share and revenue of $148.7 billion, reflecting year-over-year changes of +6.49% and +1.07%, respectively [3] - Recent analyst estimate revisions for Kroger indicate positive trends, suggesting a favorable business outlook [3] Valuation Metrics - Kroger has a Forward P/E ratio of 15.17, which is lower than the industry average Forward P/E of 15.32 [6] - The company has a PEG ratio of 2.3, compared to the average PEG ratio of 1.87 for the Retail - Supermarkets industry [7] Industry Ranking - The Retail - Supermarkets industry is part of the Retail-Wholesale sector and currently holds a Zacks Industry Rank of 70, placing it in the top 29% of over 250 industries [8] - Strong individual industry groups, as measured by the Zacks Industry Rank, tend to outperform weaker groups by a factor of 2 to 1 [8]

Core Insights - The Kroger Co. has achieved a top score on the Disability Equality Index®, marking its recognition as a "Best Place to Work for Disability Inclusion" for the sixth consecutive year [1][2]. Company Commitment - Kroger emphasizes its commitment to creating a workplace where associates of all abilities can thrive and contribute meaningfully [2]. - The company has established an inclusive environment that empowers associates to be their authentic selves [2]. Disability Equality Index - The Disability Equality Index is a comprehensive tool that assesses disability inclusion across six key areas: Culture & Leadership, Enterprise-Wide Access, Employment Practices, Community Engagement, Supplier Inclusion, and Responsible Procurement [2]. - Companies that achieve a top score are recognized for their efforts in advancing disability inclusion practices [2][5]. Additional Recognitions - Kroger has received multiple accolades, including recognition for excellence in early career hiring, diversity, and trustworthiness from various organizations [3]. - The company is noted for its commitment to diversity and inclusion, further enhancing its reputation as a desirable workplace [3]. Company Overview - Kroger operates with over 400,000 associates serving over 11 million customers daily through various retail and eCommerce platforms [4]. - The company's mission is to "Feed the Human Spirit™" while promoting community initiatives like ZeroHungerZeroWaste [4]. Disability:IN - Disability:IN is a leading nonprofit resource that supports business disability inclusion globally, partnering with major companies to drive progress and deliver long-term business impact [7].

More than $100 in grocery savings available to Boost by Kroger Plus members during the two-week event; for a limited time renew or enroll at 50% off CINCINNATI, July 14, 2025 /PRNewswire/ -- The Kroger Co. (NYSE: KR) today announced the return of Boost Bonus Days, a mega-sales event giving Boost by Kroger Plus members exclusive access to even more benefits offered through their membership from July 16-July 29. "Boost by Kroger Plus offers members incredible savings every day, and those savings are about to ...

Core Viewpoint - The consumer staples sector is viewed as a safe investment during economic uncertainty, as it includes companies that produce essential goods that people need daily [1][5]. Group 1: Definition and Characteristics of Consumer Staples - Consumer staples stocks consist of companies that produce or sell basic goods, such as groceries and personal-care items [6]. - The Global Industry Classification Standard (GICS) categorizes the Consumer Staples sector as including food and staples retail, food and beverage production, and household and personal product manufacturing [7]. - These stocks are considered defensive, generating stable revenues and producing significant free cash flow, often returned to shareholders as dividends [8]. Group 2: Investment Rationale - Investors are drawn to consumer staples stocks because they provide a steady demand for necessities, making them less sensitive to economic fluctuations [8]. - Historical performance shows that consumer staples outperformed the S&P 500 during major downturns, such as the Great Recession and the COVID-19 crash [10]. - Despite their defensive nature, consumer staples may have limited growth potential during economic expansions, as demand for basic goods does not significantly increase [11]. Group 3: Identifying Quality Consumer Staples Stocks - A quality screen for consumer staples stocks includes criteria such as being part of the S&P Composite 1500, having a long-term estimated earnings-per-share growth rate of at least 5%, and having at least five covering analysts [12][13][14]. - Stocks should also have a consensus Buy rating of 2.5 or less and a dividend yield of at least 1.5% to ensure they provide better income than the S&P 500 [15][16]. Group 4: Recommended Consumer Staples Stocks - The following companies are highlighted as strong consumer staples stocks based on the outlined criteria: - Dollar General (DG): Long-term EPS growth of 6.5%, consensus rating of 2.39, dividend yield of 2.1% [16] - Tyson Foods (TSN): Long-term EPS growth of 19.6%, consensus rating of 2.29, dividend yield of 3.5% [16] - Kroger (KR): Long-term EPS growth of 6.1%, consensus rating of 2.16, dividend yield of 1.8% [16] - Sysco (SYY): Long-term EPS growth of 6.1%, consensus rating of 2.10, dividend yield of 2.6% [16] - Keurig Dr Pepper (KDP): Long-term EPS growth of 7.2%, consensus rating of 1.91, dividend yield of 2.7% [16] - Philip Morris International (PM): Long-term EPS growth of 11.4%, consensus rating of 1.88, dividend yield of 3.0% [16] - Coca-Cola (KO): Long-term EPS growth of 6.1%, consensus rating of 1.62, dividend yield of 2.9% [16]

Core Insights - Kroger is focusing on making summer meal planning affordable for families by offering a grocery haul that provides five kid-friendly lunches for under $50, translating to less than $2 per person [1][3] - The company has lowered prices on thousands of grocery staples, emphasizing value and savings for customers during the summer season [1][4] - Kroger's commitment to quality is highlighted through its Fresh & Quality Guarantees, ensuring customers do not have to compromise on quality for lower prices [4] Pricing and Promotions - Kroger is promoting a variety of summer meal options, including turkey pinwheels, cheese quesadillas, and grilled cheese, with prices for these items being very competitive, such as $2.29 for peanut butter and 79 cents for macaroni and cheese [8] - The company is simplifying promotions and offering bulk packages, which allows families to stock up on favorite items while saving money [4] Customer Engagement - Kroger aims to enhance customer experience by providing meal solutions that allow families to spend more time together rather than focusing on shopping [3] - The grocery chain is also promoting a wide selection of summer treats, including ice cream, at prices starting as low as $2.79, further appealing to families during the summer [4]

Company Overview - Kroger Co. operates in the thin-margin grocery industry and is undergoing a significant transformation in product offerings and shopping preferences [11] - The company is focusing on plant-based products and technological expansion, including the acquisition of meal kit company Home Chef and a partnership with British online grocery delivery firm Ocado [11] - Kroger has introduced grocery delivery service Kroger Ship and has partnered with driverless car company Nuro to enhance its online ordering and home delivery capabilities [11] Investment Insights - Kroger is currently rated 3 (Hold) on the Zacks Rank, with a VGM Score of A, indicating a solid overall performance [12] - The Momentum Style Score for Kroger is B, with shares having increased by 4.7% over the past four weeks [12] - Three analysts have revised their earnings estimates higher for fiscal 2026, with the Zacks Consensus Estimate increasing by $0.02 to $4.76 per share, and Kroger has an average earnings surprise of 1.4% [12][13]

Core Insights - The Zacks Retail – Supermarkets industry is experiencing challenges due to persistent inflation and changing consumer spending habits, which are impacting revenue growth [1][5] - Leading supermarket retailers are focusing on omnichannel strategies to enhance competitiveness and drive long-term growth [2][6] Industry Overview - The industry encompasses various supermarket retailers offering a wide range of products, including groceries, health and beauty aids, and household items, operating through multiple formats [3] - E-commerce has significantly transformed the industry, with retailers enhancing pickup and delivery services to meet rising consumer preferences for online shopping [3] Major Trends - Rising operational costs, including store renovations and wage increases, are squeezing profitability for supermarket players [4] - Economic conditions, such as inflation and geopolitical tensions, are reshaping consumer behavior, leading to a preference for budget-friendly products [5] - Supermarket retailers are investing in digital transformation and omnichannel strategies to improve customer experience and operational efficiency [6] Industry Performance - The Zacks Retail – Supermarkets industry currently ranks 179, placing it in the bottom 27% of over 250 Zacks industries, indicating dull near-term prospects [7][8] - The industry has outperformed the S&P 500, with a growth of 44% over the past year compared to the S&P 500's 12.5% [10] Current Valuation - The industry is trading at a forward 12-month price-to-earnings (P/E) ratio of 32.93X, significantly higher than the S&P 500's 22.43X and the sector's 17.42X [13] Company Highlights - Walmart Inc. is leveraging a diversified business model and strong omnichannel strategy, with a consensus EPS estimate of $2.59 for the current fiscal year and a share price increase of 44.2% over the past year [15][16] - The Kroger Co. is focusing on digital transformation and customer-centric approaches, with a recent EPS estimate increase to $4.76 and a share price rise of 41.3% in the past year [19][20]

Sales Performance - Kroger reported first quarter sales of $45,118 million, a slight decrease of 0.3% compared to $45,269 million in the same period last year[84]. - Total sales decreased by 0.3% in Q1 2025 compared to Q1 2024, primarily due to a 12.5% decrease in supermarket fuel sales and the sale of Kroger Specialty Pharmacy[99]. - Total sales to retail customers without fuel increased by 1.1% to $40,401 million in Q1 2025, compared to $39,967 million in Q1 2024[100]. - Identical sales excluding fuel increased by 3.2% in the first quarter of 2025, compared to a 0.5% increase in the first quarter of 2024[84]. - Identical sales, excluding fuel, increased by 3.2% in Q1 2025, with total sales reaching $39,766 million compared to $38,535 million in Q1 2024[103]. eCommerce Growth - eCommerce sales grew by 15% in the first quarter of 2025, driven by strong demand for delivery solutions[88]. - eCommerce sales grew by 15% in Q1 2025, driven by a 20% increase in Delivery solutions[100]. Profitability - Operating profit for the first quarter was $1,322 million, representing a 2.2% increase from $1,294 million in the first quarter of 2024[84]. - Operating profit for Q1 2025 was $1.3 billion, or 2.93% of sales, an increase of 7 basis points from Q1 2024[116]. - FIFO operating profit was $1.4 billion, or 3.02% of sales, reflecting a 3 basis point increase compared to Q1 2024[117]. - Gross margin improved to 23.0% in Q1 2025 from 22.0% in Q1 2024, attributed to the sale of Kroger Specialty Pharmacy and lower supply chain costs[106]. Earnings - Adjusted net earnings attributable to Kroger per diluted common share were $1.49, a 4.2% increase compared to $1.43 in the first quarter of 2024[84]. - The net earnings attributable to The Kroger Co. excluding adjusted items was $996 million in Q1 2025, a decrease of 4.9% from $1,047 million in Q1 2024[97]. - Adjusted net earnings per diluted share increased by 4.2% to $1.49 in Q1 2025, compared to $1.43 in Q1 2024[97]. - Adjusted net earnings per diluted share for Q1 2025 were $1.49, a 4.2% increase from $1.43 in Q1 2024[123]. Cash Flow and Investments - Cash flows from operations decreased by 8% to $2.1 billion compared to the first quarter of 2024[88]. - Net cash provided by operating activities decreased to $2.1 billion in Q1 2025 from $2.3 billion in Q1 2024[126]. - Capital investments totaled $1.2 billion for both Q1 2025 and Q1 2024, with 27 supermarkets opened or remodeled[130]. Debt and Financial Management - Kroger is committed to maintaining a net total debt to adjusted EBITDA ratio target range of 2.30 to 2.50[79]. - Total debt remained consistent at $17.9 billion as of May 24, 2025, compared to the fiscal year-end 2024[133]. - As of May 24, 2025, the company held cash and temporary cash investments of $4.7 billion, reflecting strong operational performance[138]. Shareholder Returns - The company returned $392 million to shareholders through share repurchases and dividend payments in the first quarter[88]. - The company expects total shareholder return within a target range of 8% to 11% over time[80]. Expenses and Charges - Operating, General and Administrative (OG&A) expenses as a percentage of sales increased to 17.6% in Q1 2025 from 16.8% in Q1 2024, influenced by decreased fuel sales and increased healthcare costs[111]. - Charges related to merger costs amounted to $175 million in Q1 2025, impacting OG&A expenses significantly[99]. - The company recorded a net charge of $44 million for labor dispute charges in Q1 2025[99]. - Net interest expense rose to $199 million in Q1 2025 from $123 million in Q1 2024, primarily due to increased average total outstanding debt[120]. - The effective income tax rate increased to 21.3% in Q1 2025 from 19.8% in Q1 2024, influenced by state income taxes and tax credits[121].

Core Insights - Kroger Co. has announced a 9% increase in its quarterly cash dividend, reflecting confidence in long-term prospects and a commitment to delivering stable returns to investors [1][10] - The annual dividend will rise from $1.28 to $1.40 per share, with the next payment of 35 cents per share scheduled for September 1, 2025 [2][10] - This marks the 19th consecutive year of dividend increases since its reinstatement in 2006, with a compounded annual growth rate of 13% over this period [3][10] Financial Performance - The company expects adjusted free cash flow between $2.8 billion and $3 billion for fiscal 2025, supporting growth and dividend payouts [4][10] - Kroger's stock has gained 6.8% over the past three months, compared to the industry's growth of 13.8% [9] - The forward 12-month price-to-sales ratio for Kroger is 0.31X, indicating a lower valuation compared to the industry average of 1.06X [11] Earnings Estimates - The Zacks Consensus Estimate for Kroger's current financial-year sales implies a year-over-year growth of 1.1%, while earnings per share are expected to grow by 6.5% [12] - For the current quarter, the sales estimate is $34.10 billion, with a year-over-year growth estimate of 0.56% [13] - The earnings per share estimate for the current quarter is $1.01, reflecting an 8.6% year-over-year growth [14]