Kroger (KR) Q1 Earnings: What's In The Cards For The Stock?

The Kroger Co. (NYSE:KR) is slated to release first-quarter fiscal 2016 results on Jun 16. The big question facing investors is, whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the trailing four quarters, it outperformed the Zacks Consensus Estimate by an average of 7.3%. Let’s see how things are shaping up for this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Kroger is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. Kroger has an Earnings ESP of 0.00% as the Most Accurate estimate and the Zacks Consensus Estimate both stand at 69 cents. Moreover, the company carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Factors Influencing this Quarter

A dominant position among the nation’s largest grocery retailers enables Kroger to sustain growth, expand store base and boost market share. The company also remains well positioned to deliver higher earnings, primarily through strong identical supermarket sales growth.

However, cautious consumer spending and higher debt-to-capitalization ratio pose concerns. Moreover, despite registering an increase of 3.8% in the final quarter of fiscal 2015, total sales fell short of the Zacks Consensus Estimate for the fourth straight quarter. All these factors will come into play in the to-be-reported quarter.

KROGER CO Price and EPS Surprise

KROGER CO Price and EPS Surprise | KROGER CO Quote

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Rite Aid Corporation (NYSE:RAD) has an Earnings ESP of +20.00% and a Zacks Rank #3 (Hold).

The Kraft Heinz Company (NASDAQ:KHC) has an Earnings ESP of +2.86% and a Zacks Rank #3.

Constellation Brands Inc. (NYSE:STZ) has an Earnings ESP of +1.97% and a Zacks Rank #3.