Kroger (NYSE:KR) will release its quarterly report on Thursday, and investors have gotten extremely bullish about the grocery chain, bidding shares up to new all-time record highs earlier in the summer. If Kroger earnings can deliver solid growth, then the stock could see even bigger gains despite tough competitive conditions in the grocery industry.

The grocery business is inherently difficult, with razor-thin margins requiring companies to be quick on their feet to take advantage of sometimes-fleeting competitive edges. But Kroger has handled the onslaught of big-box retailers and specialty natural-foods markets with a measured strategic approach that has helped the company thrive where others have fared worse. Let's take an early look at what's been happening with Kroger over the past quarter and what we're likely to see in its report.

Stats on Kroger

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$22.67 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Kroger earnings leave investors satisfied this quarter?
Analysts have gotten more optimistic about Kroger earnings in recent months, hiking their July quarter estimates by a penny per share and their full-year projections by a nickel per share. The stock has also done well, climbing 14% since early June.

What's particularly impressive about Kroger's stock performance is that it came despite April-quarter earnings that disappointed investors. Kroger managed to boost profits 18% on a 3.4% gain in revenue for the quarter. But sales fell short of analyst estimates, worrying investors about Kroger's ability to sustain its growth despite its impressive track record of 38 straight quarters of same-store sales increases. Even raising its earnings guidance wasn't enough to prevent a short-term stock slide.

The big piece of news for Kroger this quarter came from its announcement that it would acquire Harris Teeter (UNKNOWN:HTSI.DL) in a $2.44 billion deal. Harris Teeter is relatively small, with just over 200 store locations. But it has a strong reputation in the mid-Atlantic region that will help Kroger boost its presence there and in the Southeast. Some have speculated that Kroger could buy A&P operator Great Atlantic & Pacific Tea as well, which could give it more Northeastern exposure.

But Kroger hasn't just thrived from growth by acquisition. The chain has also done an exemplary job in boosting sales per square foot, climbing above rival Safeway (NYSE:SWY) since 2010 and staying substantially above levels posted by SUPERVALU (NYSE:SVU). That helps explain why Kroger has been in position to extend its reach even as SUPERVALU sold off a big part of its operations and Safeway sold its Canadian stores in June.

Perhaps more importantly, Kroger has taken a swing at Whole Foods (NASDAQ:WFM) by cutting prices on organic food. By doing so, it hopes to reverse the perception that organics are only for high-income shoppers who can afford premium prices. If it succeeds, it could mean trouble for Whole Foods, which has counted on that perception in producing its high profit margins.

In the Kroger earnings report, watch to see how management describes the ongoing progress with its acquisition plans. As the grocery chain grows, it'll be important to sustain the operational excellence that has helped it outperform its peers for so long.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends Whole Foods Market and owns shares of SUPERVALU and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.