The S&P 500 and Dow both opened lower this morning, as Wall Street digests Fed Chair Janet Yellen’s comments yesterday and considers next week’s “Brexit” vote. However, despite the pullback this morning, shares of The Kroger Co. (KR) are up more than 2% this morning. And the reason why is simple: Kroger topped analysts’ earnings estimates in the first quarter.
Kroger is one of the largest retail grocery chains in the U.S. It operates more than 2,775 retail food stores in 35 states and in Washington, D.C. And the first quarter marks 50-straight quarters of positive identical supermarket sales growth (excluding fuel). In fact, identical supermarket sales growth without fuel rose 2.4% in the first quarter.
Kroger reported that total first-quarter sales increased 4.7% year-over-year to $34.6 billion, while total sales excluding fuel jumped 7.8% year-over-year. This was just shy of analysts’ estimates for total sales of $34.88 billion.
First-quarter earnings climbed 2.4% year-over-year to $680 million, or $0.70 per share. That’s up from $619 million, or $0.62 per share, in the first quarter 2015. The analyst community was looking for earnings for $0.69 per share, so Kroger posted a 1.45% earnings surprise.
In addition, Kroger reiterated is full-year 2016 earnings guidance. The company expects earnings per share between $2.19 and $2.28, which represents 6.3% to 10.7% annual earnings growth. This is also in line with analysts’ current estimates for $2.25 per share. And identical supermarket sales growth (excluding fuel) is forecast to increase between 2.5% and 3.5% this year.
As a result, it’s no surprise that Kroger is highly rated in Portfolio Grader and Dividend Grader. Kroger receives a B-rating in Portfolio Grader, thanks to its consistent earnings growth. Kroger also earns an A-rating from Dividend Grader, as the company also has a strong history of rewarding its shareholders. The company expects to continue this trend by paying $397 million in dividends in 2016.
Overall, Kroger’s first-quarter report was very good today, and if you are looking for stock that offers excellent earnings and sales growth, as well as solid dividend payments, you may want to consider adding KR to your portfolio.