Is it time to invest in Kroger stock as shares spike 12% on upbeat FY2022 guidance?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Dec 3, 2021
  • Kroger shares on Thursday spiked by more than 12%.
  • The company announced its FQ3 results before markets opened, beating analyst expectations.
  • It also raised its FY2022 guidance above the consensus for Street expectations.

On Thursday, Kroger Co. (NYSE:KR) shares surged by more than 12% after announcing its most recent quarterly results. The company reported its fiscal third-quarter revenue and earnings before markets opened, beating the consensus for analysts expectations. The Grocery store chain also issued a full-year 2022 guidance ahead of Street forecasts.

Kroger posted FQ3 non-GAAP earnings per share of $0.78, outperforming the average for analyst expectations of $0.67. On the other hand, its GAAP EPS of $0.64 failed to match the consensus estimate of $0.71, while revenue for the quarter increased by 7.3% from the same quarter a year ago to $31.9 billion, exceeding expectations by $680 million.

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Kroger now expects a full-year 2022 non-GAAP diluted EPS in the range of $3.40-$3.50 compared to the consensus Street forecast of $3.35. It also expects same-store sales to grow by 13.7% to 13.9% from last year, up from the previous guidance of 12.6% to 13.1%.

Is Kroger a value stock?

From an investment perspective, Kroger shares trade at an attractive forward P/E ratio of 13.76, thus making it a compelling option for value investors. 

In addition, analysts are optimistic about its earnings prospects, forecasting an EPS growth of more than 60% this year plus an average annual increase of 6.43% over the next five years.

Therefore, the stock could also gain the attention of long-term growth investors.

Source – TradingView

Technically, Kroger shares seem to have recently spiked to complete an upward breakout from an ascending channel formation. As a result, the stock has rocketed closer to the overbought conditions of the 14-day RSI.

However, given the company’s bullish FY2022 outlook, investors could target extended gains deep into overbought conditions at about $46.58, or higher at $48.01, while $43.61 and $41.93 are support levels.

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