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Kroger (KR) Boosts Shareholder Returns With $1B Buyback Plan

By Zacks Investment ResearchStock MarketsDec 31, 2021 02:29AM ET
www.investing.com/analysis/kroger-kr-boosts-shareholder-returns-with-1b-buyback-plan-200613297
Kroger (KR) Boosts Shareholder Returns With $1B Buyback Plan
By Zacks Investment Research   |  Dec 31, 2021 02:29AM ET
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The Kroger (NYSE:KR) Co. KR remains committed to maximize shareholder value. In a latest development, KR’s board authorized a new $1-billion share repurchase program. This underpins strength in KR’s free cash flow generation capabilities.

The new buyback program replaces the existing plan, having roughly $157 million outstanding as of Dec 29, 2021. The new repurchase plan has no expiration date. However, the same can be suspended or terminated by Kroger’s board at any time.

During the third quarter of fiscal 2021, management bought back $297 million of shares and year-to-date through the fiscal third quarter, KR repurchased $1 billion of shares. Backed by sound fundamentals, Kroger announced an increase in its quarterly dividend in June this year.

The hike marked KR’s 15th successive year of dividend increase. The retailer’s board of directors raised the quarterly dividend by 17% to 21 cents a share. Presently, Kroger has a dividend payout of 22.8% and a dividend yield of 1.5%.

Kroger is constantly generating robust free cash flow and had earlier stated delivering free cash flow between $2.4 billion and $2.6 billion in fiscal 2021.

What’s More?

Kroger is consistently expanding its customer fulfillment centers (CFCs) to new geographies to enrich customers’ shopping experience and ensure efficient deliveries amid a dynamic retail landscape. We believe that this process of availing fresh food via interconnected, automated and innovative expedite deliveries will tap incremental sales for KR.

Kroger is on track to widen its fulfillment network to the Indianapolis area. This network is likely to enhance customers’ shopping experience with advanced digital services and delivery capabilities. Earlier, management shared plans of developing a CFC in North Carolina, which will be powered by Ocado (LON:OCDO). KR remains committed to open sites in California, Dallas, TX, Forest Park, GA (Atlanta), Frederick, MD, Phoenix, AZ, Pleasant Prairie, WI, Romulus, MI (Detroit), South Florida, the Northeast, Pacific Northwest and the West.

Additionally, Kroger continues to boosting its market share with endeavors, such as expanding plant-based products, digital coupons, order online pick up in store capabilities and smart shopping lists. KR’s Customer 1st strategy lifts consumers’ shopping experience and convinces them of returning to the store. KR also started accepting the Supplemental Nutrition Assistance Program (SNAP) benefits for pickup orders. KR’s digital business remains one of its key drivers.

This currently Zacks Rank #3 (Hold) player’s shares have increased 42.4% in the past year compared with the industry’s 6.9% growth.

Hot Stocks in Retail

Some better-ranked stocks are Boot Barn (NYSE:BOOT) Holdings BOOT, Target TGT and Tractor Supply Company (NASDAQ:TSCO) TSCO.

Boot Barn Holdings, a lifestyle retailer of western and work-related footwear, apparel and accessories, sports a Zacks Rank #1 (Strong Buy) at present. The stock has jumped 187% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Boot Barn Holdings’ next financial-year sales and earnings per share (EPS) suggests growth of 0.9% and 1.3%, respectively, from the year-ago corresponding figures. BOOT has a trailing four-quarter earnings surprise of 35.3%, on average.

Target, a renowned omni-channel retailer, presently carries a Zacks Rank #2 (Buy). TGT has a trailing four-quarter earnings surprise of 19.7%, on average. The stock has rallied 24.1% in the past year.

The Zacks Consensus Estimate for Target’s next financial-year sales and EPS suggests growth of 2.3% and 0.6%, respectively, from the corresponding year-ago levels. TGT has an expected EPS growth rate of 14.4% for three-five years.

Tractor Supply Company, a rural lifestyle retailer in the United States, currently flaunts a Zacks Rank of 2. TSCO has a trailing four-quarter earnings surprise of 22.8%, on average. Shares of TSCO have surged 45.1% in the past year.

The Zacks Consensus Estimate for Tractor Supply Company’s next financial-year sales and EPS suggests growth of 3.5% and 0.5%, respectively, from the year-ago corresponding readings. TSCO has an expected EPS growth rate of 10.2% for three-five years.


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Target Corporation (NYSE:TGT): Free Stock Analysis Report

Tractor Supply Company (TSCO): Free Stock Analysis Report

The Kroger Co. (KR): Free Stock Analysis Report

Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report

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Kroger (KR) Boosts Shareholder Returns With $1B Buyback Plan
 

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Kroger (KR) Boosts Shareholder Returns With $1B Buyback Plan

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