Please ensure Javascript is enabled for purposes of website accessibility

Why Kroger's Stock Is Ringing the Register Today

By Rich Duprey – Dec 2, 2021 at 7:08AM

Key Points

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The supermarket giant is still benefiting from the pandemic-fueled consumer shift to cooking at home.

What happened

Shares of Kroger (KR -0.86%) are racing 10.3% higher as of 10:56 a.m. ET on Thursday after the supermarket chain reported strong third-quarter earnings and raised its full-year outlook.

While inflation has made even produce pricier, cooking at home is still a more affordable option than dining out, and the grocery store operator is expecting dining in to remain on the menu for consumers.

Person holding a bag of groceries in a kitchen.

Image source: Getty Images.

So what

Kroger third-quarter sales topped $31.9 billion. Excluding fuel sales from the equation, that amounts to a 2.9% gain from last year and beats analyst estimates of $31.2 billion. Adjusted earnings of $0.78 per share also trounced Wall Street expectations of $0.66 per share.

What really enthused the market, though, was the outlook for the rest of the year. Kroger said it now expects revenue compared to 2019 to be 13.7% to 13.9% higher, with adjusted net earnings to be in the range of $3.40 to $3.50 per share. That's a big step up from its previous outlook of $3.25 to $3.35 per share.

Chairman and CEO Rodney McMullen said, "Our agility, and the commitment from our amazing associates, is allowing us to navigate current labor and supply chain conditions and provide the freshest food at affordable prices across our store and digital ecosystem."

Now what

Inflation is hitting consumer pocketbooks hard, forcing them to economize. While that doesn't bode well for the restaurant and hospitality industries, supermarkets like Kroger will benefit from the stay-at-home ethos that was developed during the pandemic.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.