Kroger (KR) to Report Q3 Earnings: Factors Worth Noting

The Kroger (NYSE:KR) Co. KR is likely to register an increase in the top line when it reports third-quarter fiscal 2021 results on Dec 2, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $31,148 million, indicating an improvement of 4.8% from the prior-year reported figure.

The bottom line of this operator of supermarket chain is expected to decrease year over year. Although the Zacks Consensus Estimate for third-quarter earnings per share has risen by a penny to 66 cents over the past 30 days, the figure suggests a decline from 71 cents a share reported in the year-ago period.

The company has a trailing four-quarter earnings surprise of 18%, on average. In the last reported quarter, this Cincinnati, OH-based company’s bottom line surpassed the Zacks Consensus Estimate by 27%.

Key Factors to Note

Kroger has been making significant investments to enhance product freshness and quality as well as expand digital capabilities and payment solutions. Impressively, it has been introducing new items under its “Our Brands” portfolio. The company has been expanding its Customer Fulfillment Center in an effort to ensure efficient deliveries. Cumulatively, these factors are likely to have favored the company’s third-quarter top-line performance.

Without doubt, Kroger’s digital business remains one of its key growth drivers. Considering the current scenario, the company has been focusing on no-contact delivery option, low-contact pickup service and ship-to-home orders. Its ‘Kroger Delivery Now’ service provides customers with food and household staples in 30 minutes. Also, its focus on margin-rich alternative profit business bode well.

Clearly, aforementioned factors instill optimism regarding the outcome of the results. However, margins still remain an area to watch. Impact of costs associated with digital fulfilment, supply chain and COVID-19 related expenses cannot be ruled out. Again, higher warehouse and transportation costs might have weighed on margins.

What Does the Zacks Model Unveil?

Our proven model predicts an earnings beat for Kroger this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kroger has a Zacks Rank #3 and an Earnings ESP of +2.59%.

3 More Stocks With Favorable Combination

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

Ulta Beauty (NASDAQ:ULTA) ULTA currently has an Earnings ESP of +0.63% and a Zacks Rank #3. The company is expected to register bottom-line growth when it reports third-quarter fiscal 2021 results. The Zacks Consensus Estimate for quarterly earnings of $2.47 per share suggests growth of 50.6% from the year-ago quarter’s reported figure.

Ulta Beauty's top line is expected to rise year over year. The consensus mark for revenues is pegged at $1.90 billion, indicating an improvement of 22.1% from the year-ago quarter. ULTA has a trailing four-quarter earnings surprise of 63.9%, on average.

G-III Apparel GIII currently has an Earnings ESP of +8.14% and a Zacks Rank #3. The company is likely to register bottom-line improvement when it reports third-quarter fiscal 2022 numbers. The Zacks Consensus Estimate for quarterly earnings per share is pegged at $1.79, which suggests growth of 36.6% from the year-ago quarter’s reported figure.

G-III Apparel’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues stands at $1.01 billion, which indicates an improvement of 22.4% from the prior-year quarter. GIII has a trailing four-quarter earnings surprise of 180.5%, on average.

Costco COST currently has an Earnings ESP of +1.00% and a Zacks Rank #3. The company is expected to register bottom-line growth when it reports first-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings of $2.59 per share suggests growth of 13.1% from the year-ago quarter’s reported figure.

Costco’s top line is expected to rise year over year. The consensus mark for revenues stands at $49.61 billion, indicating an increase of 14.8% from the figure reported in the year-ago quarter. COST has a trailing four-quarter earnings surprise of 7.7%, on average.

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