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Kroger Co. (NYSE:KR) is lined up to report earnings on November 30 before the stock market opens. The grocery store operator heads into earnings day with shares on a gentle rise over the last week.
Key areas of focus with the Kroger (KR) earnings update, include management’s inflation expectations, color on market share trends considering the volume strength at value players, promotional, and the latest information on the Albertsons (ACI) merger.
Ahead of the report, Wells Fargo analyst Edward Kelly advised that investors should look straight through any short-term earnings beat. Kelly thinks it will be difficult for Kroger (KR) to shake growing investor concerns about 2024. “Deflation risk and volume weakness represent a tough combination for a conventional unionized grocer,” he noted. Wells Fargo kept an Underweight rating on Kroger (KR), despite the expectation for an earnings topper. Wells Fargo’s overall cautious view on Kroger (KR) boils down to the inherent earnings risk seen as the company cycles out of the best operating environment in grocery history. “Dis-inflation, the lapping of rich fuel margins, potential return of industry promotions, and relatively high labor inflation represent key challenges to earnings growth moving forward,” warned Kelly.
Options trading on Kroger (KR) implies a 5% swing for shares following the report. Kroger rallied 3% after its last earnings report. On the M&A front, FTC Chair Lina Khan recently said she doesn’t expect the antitrust regulator to make a decision on Kroger’s (KR) planned $25 billion purchase of Albertsons (ACI) until next year. The Kroger (KR)-Albertsons (ACI) merger agreement has a termination date of January 13, 2024, that can be extended in 30-day blocks for up to 270 days.
Kroger (KR) traded flat in the premarket session on Monday at $44.16.
