Wall Street Bulls Look Optimistic About Kroger (KR): Should You Buy?

Core Viewpoint - Brokerage recommendations, particularly for Kroger, suggest a favorable outlook, but reliance solely on these recommendations may not be prudent due to potential biases and misalignment with retail investors' interests [5][10]. Group 1: Brokerage Recommendations - Kroger has an average brokerage recommendation (ABR) of 1.90, indicating a range between Strong Buy and Buy, based on 20 brokerage firms' recommendations [2]. - Out of the 20 recommendations, 11 are classified as Strong Buy, accounting for 55% of the total recommendations [2]. - Despite the positive ABR, studies indicate that brokerage recommendations often fail to effectively guide investors towards stocks with significant price appreciation potential [5][10]. Group 2: Analyst Bias and Zacks Rank - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, issuing five "Strong Buy" recommendations for every "Strong Sell" [6][10]. - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from Zacks Rank 1 (Strong Buy) to Zacks Rank 5 (Strong Sell) and is based on earnings estimate revisions, which correlate strongly with near-term stock price movements [8][11]. - The Zacks Rank is more timely and reflects current business trends, unlike the ABR, which may not always be up-to-date [12]. Group 3: Kroger's Current Position - The Zacks Consensus Estimate for Kroger's earnings for the current year remains unchanged at $4.74, indicating steady analyst views on the company's earnings prospects [13]. - Due to the unchanged consensus estimate and other factors, Kroger holds a Zacks Rank 3 (Hold), suggesting caution despite the favorable ABR [14].