Kroger Q2: Don't Let Weak Same-Store Sales Fool You

Kenio Fontes 3.16K Followers Follow Summary The Kroger Co. delivered a mixed Q2, with weak ID sales but solid EPS and margin improvement, justifying its current low valuation. KR's operational execution shines through cost controls, e-commerce, and retail media growth, driving a 12.5% operating income increase despite top-line headwinds. Guidance for FY EPS of $5.10–$5.30 and ID sales growth of 0.2%–0.8% reflects ongoing headwinds, but margin expansion and buybacks support 7% EPS growth. I maintain a Buy rating on KR stock, citing a wide margin of safety at 10.9x forward earnings and superior shareholder yield versus industry peers. neiu20001/iStock Editorial via Getty Images Before talking about this quarter, let’s take a step back to say that in Q1, The Kroger Co. ( KR ) delivered an ugly result. You can check more about Q1 in my last This article was written by Kenio Fontes 3.16K Followers Follow Equity Research Analyst with a broad career in the financial market, covered both Brazilian and global stocks. As a value investor, my analysis is primarily fundamental, focusing on identifying undervalued stocks with growth potential. Feel free to reach out for collaborations or to connect! Analyst’s Disclosure: I/we have a beneficial long position in the shares of AMZN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.