KR - Embedded Expectations Analysis - 2021 05 04
The Kroger Co. (KR:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 22.3x Uniform P/E. At these levels, the market has expectations for profitability to remain stable, but management may have concerns about digital channel growth, their product portfolio, and operating productivitySpecifically, management may lack confidence in their ability to maintain market share gains, preserve their digital channel growth, and sustain customer retention rates. Furthermore, they may be overstating their focus on widening their competitive moats, the potential of their Our Brands portfolio, and the success of new product launches, including Simple Truth Oat Milk ice cream. Furthermore, management may lack confidence in their ability to maintain productivity improvements, meet their operating profitability guidance, and invest in high growth markets. Finally, they may lack confidence in their ability to focus on and leverage new technologies, preserve their profitability and sales growth positioning, and improve their promotional activity success
Kroger operates as a retailer. The company also manufacture and process some of the food for sale in its supermarkets. Supermarkets are operated under one of the following formats: combination food and drug stores (combo stores); multi-department stores; marketplace stores; or price impact warehouses. The combo stores provide food and organic sections, pharmacies, general merchandise, pet centers and perishables such as seafood and organic produce. Marketplace provide grocery, pharmacy and health and beauty care departments as well as perishable offering and general merchandise area that includes apparel, home goods and toys.
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