3 Things to Watch for in Kroger’s Earnings Report

Kroger (KR) will release its earnings on Thursday, with the company aiming for its 50th straight quarter of sales growth. The grocer has trailed the market this year by double digits, which has caused concerns among investors that are hoping the company rebounds.

There is a chance the grocer may lag behind the market, too, which is a concern.

Three things to watch for in Thursday’s earnings report are:

1.     Comparable-Store Sales Growth

Kroger is attempting to reach a sales growth milestone, but comparable store sales slumped 4% last quarter for the first time in over a year. Slow food cost inflation was to blame for lower sales growth and not store traffic.

When not accounting for slumping food costs, comparable sales would have risen by 6%.

Comparable-store sales growth will be a figure that garners a lot of attention from investors. Analysts are expecting comparable-store sales growth of 2% – 3%.

2.     EPS Estimates of $0.69

Analysts expect the company to post earnings per share of $0.69 on the quarter. The figure would be a 10% jump from the same quarter last year. Kroger forecasts EPS of $2.25 on the year.

Kroger outperformed its earnings guidance last year, which allows for the potential for the company’s EPS to outperform again.

The company also finished a $1 billion merger with Roundy’s, which will result in a short-term hit on the quarter.

3.     Cash Flow Growth

Kroger’s cash flow has been on an upward trend since 2013, with the company on an annual pace of $5 billion in cash flow. If the company can maintain a high cash flow, this positions Kroger for a strong future.

The company’s strong cash flow allowed for the acquisition of Roundy’s and will allow the company to invest heavily in its current operations.

Strong cash flow growth will provide further investor confidence in Kroger.