To The Moon

$Kroger(KR)$ is scheduled to report its Q2 2025 earnings on Thursday, September 11, 2025, before the market opens. The fiscal quarter for this report ended on August 16, 2025.

Earnings Per Share (EPS): The consensus EPS forecast is around $1.00 per share. This would represent a significant increase from the $0.93 per share reported in the same quarter last year.

Revenue: Analysts expect revenue of approximately $34.12 billion, which would be a slight increase of about 0.6% from the prior-year quarter.

Kroger's Fiscal Q1 2025 Earnings Summary

Kroger delivered a strong performance in its first fiscal quarter of 2025, which ended on May 24, 2025. The company's results generally exceeded analyst expectations, particularly on the bottom line, despite a slight miss on revenue.

Earnings Beat: Kroger reported adjusted earnings per share (EPS) of $1.49, which surpassed the analyst consensus of $1.45. This earnings beat was a key driver of the positive market reaction to the report.

Revenue Miss: Total company sales were $45.12 billion, slightly below the forecast of $45.28 billion. This was primarily due to a decline in fuel sales and the absence of sales from Kroger Specialty Pharmacy, which was sold. Excluding these factors, sales increased by 3.7% year-over-year.

Identical Sales Growth: A crucial metric for retailers, identical sales (excluding fuel) grew by 3.2%. This was a positive surprise and a strong indicator of the company's core business health, as it outpaced the analyst expectation of a 2.3% increase.

E-commerce and Private Label Strength: Kroger's digital business showed continued momentum, with e-commerce sales growing by 15%. Additionally, the company's private-label "Our Brands" products demonstrated strong performance, outpacing national brands for the seventh consecutive quarter.

Margin Improvement: The gross margin on a FIFO (First-In, First-Out) basis increased by 79 basis points, driven by factors like the sale of Kroger Specialty Pharmacy, lower product shrink, and improved supply chain costs. This indicates the company's successful efforts to enhance profitability.

Store Closures: Kroger announced a plan to close approximately 60 underperforming stores over the next 18 months to streamline operations and focus on high-return projects.

Lessons Learned from the Guidance

The company's guidance for the remainder of fiscal 2025 offered key insights into management's strategy and outlook.

Confidence in Core Business: The most significant lesson from the guidance was the management's confidence in its core grocery business. Kroger raised its full-year guidance for identical sales without fuel to a new range of 2.25% to 3.25%. This was a direct result of the strong Q1 performance and signaled that the company expects its positive sales momentum to continue.

Operational Discipline and Strategic Focus: While raising the sales guidance, Kroger reaffirmed all other full-year guidance, including for adjusted EPS. This indicates that the company is not just focused on top-line growth but is also maintaining strict operational discipline to manage costs and drive profitability. The company's strategic focus on e-commerce, private brands, and supply chain efficiency is clearly paying off.

Prudent Outlook in an Uncertain Macro-Environment: The decision to keep the full-year EPS guidance unchanged, despite the strong Q1 earnings, suggests a cautious approach. Management acknowledged that the macroeconomic environment remains uncertain. This shows they are being prudent and not overcommitting, which is a sensible strategy in the current economic climate with fluctuating consumer confidence and spending patterns.

Capital Allocation for Long-Term Value: The report highlighted Kroger's commitment to returning capital to shareholders through its $7.5 billion share repurchase authorization. The company announced a $5 billion accelerated share repurchase (ASR) program to be completed by Q3 2025, followed by open market repurchases. This demonstrates management's belief that the stock is undervalued and a commitment to enhancing shareholder value.

Adaptability is Key: The Q1 results and guidance reflect Kroger's ability to adapt to changing consumer behavior. The growth in e-commerce and private-label brands demonstrates that customers are seeking both convenience and value. Kroger's investments in these areas and the decision to close underperforming stores show a dynamic strategy aimed at optimizing its business for the future.

Analyst Expectations

Analysts generally have a positive outlook for this quarter, with expectations for both earnings and revenue to show year-over-year growth. The key consensus figures are:

It is worth noting that the consensus EPS estimate has seen a slight upward revision over the past 30 days, which can be a bullish sign.

Key Metrics for Investors to Watch

While EPS and revenue are the headline numbers, a deeper dive into the report's details will provide a more complete picture of the company's health. Investors should focus on the following key metrics:

Identical Sales (excluding fuel): This is a crucial metric for the retail industry as it measures sales growth from existing stores, which indicates the underlying health of the business and customer demand. Kroger has previously raised its guidance for full-year identical sales growth. Be on the lookout for a potential beat or guidance change.

E-commerce Sales: As consumer habits continue to shift, the growth of Kroger's digital business is a key indicator of its ability to compete with online retailers and maintain market share. In its last quarter, Kroger reported a 15% increase in e-commerce sales. Investors will be looking for continued strong growth in this area.

Gross Margin and Operating Margin: These metrics are essential for understanding the company's profitability and its ability to manage costs in a high-inflation environment. A strong gross margin indicates pricing power, while the operating margin shows how effectively the company is managing its overall operations.

Fuel Sales: Fuel sales can be volatile and impact total revenue. The analyst consensus currently points to a decrease in fuel sales, so it's important to look at the "identical sales without fuel" metric to get a clear picture of core grocery business performance.

Merger and Acquisition Updates (Albertsons): Any news or updates regarding the pending merger with Albertsons will be a major driver of the stock price. Investors will be listening for any new developments, particularly concerning regulatory approvals or potential hurdles.

Guidance for the Remainder of Fiscal 2025: Beyond the Q2 results, the company's updated full-year guidance will be critical. Any changes to the forecasts for adjusted EPS, identical sales, or free cash flow will signal management's confidence in the company's future performance.

Kroger (KR) Price Target

Based on 19 analysts from Tiger Brokers offering 12 month price targets for Kroger Company in the last 3 months. The average price target is $76.17 with a high forecast of $85.00 and a low forecast of $63.15. The average price target represents a 12.62% change from the last price of $67.63.

Opportunities for Short-Term Trading Post-Earnings

Trading around earnings reports is inherently risky and can be highly volatile. Here's an analysis of potential short-term trading opportunities:

Historical Price Action: Historically, Kroger's stock has shown mixed but often positive reactions to earnings reports. Over the past five years, the stock has seen a positive one-day return after earnings about 60% of the time. The median positive return was approximately 6.3%, while the median negative return was around -2.8%. This suggests that when the stock moves up, it tends to do so more significantly than when it moves down.

Potential for a "Beat and Raise" Scenario: Given the upward revision in EPS estimates and the company's recent strong performance, there's a possibility of a "beat and raise" scenario, where Kroger exceeds both earnings and revenue expectations and raises its full-year guidance. Such an outcome could lead to a significant short-term rally.

The "Hammer Pattern" and Analyst Optimism: Recent technical analysis has identified a "hammer chart pattern" for KR, which can signal a potential bottom and trend reversal. This, combined with the rising optimism among analysts, could suggest that the stock is poised for an upward move.

Risk Factors: The primary risk is a miss on key metrics or a conservative outlook from management. If the company fails to meet expectations, particularly with identical sales or a key metric like e-commerce growth, the stock could face downward pressure. Additionally, any negative news or uncertainty regarding the Albertsons merger could spook investors.

Technical Analysis - Exponential Moving Average (EMA)

We can see that KR is in a bearish downside trend, from the EMA, but RSI momentum remains positive, Kroger's (KR) technical indicators present a mixed outlook, with some suggesting a sell or neutral position while others indicate a potential buy, particularly with moving averages showing positive trends.

Short-term trends are generally negative, while the longer-term trend appears neutral to positive, though the company is slightly underperforming the broader S&P 500 market.

The outlook is mixed, with some analyses showing a strong sell and others a bullish trend, while the 50-day and 200-day MAs suggest a sell or neutral outlook. 

So we need an earnings beat as the sentiment is generally negative, with recent trading activity at the lower end of its trading range. 

Summary

Kroger is scheduled to report its fiscal Q2 2025 earnings on Thursday, September 11, 2025, before the market opens. Analysts expect an EPS of around $1.00 on revenue of $34.13 billion. This would represent an 8% year-over-year increase in earnings, but only marginal sales growth.

Key metrics for investors to watch include identical sales (excluding fuel) to gauge core business strength, e-commerce sales growth, and the company's profitability margins. Updates on the pending Albertsons merger will also be a major factor.

Historically, the stock has shown a positive reaction to earnings reports about 60% of the time. A "beat and raise" scenario—where Kroger exceeds expectations and raises its full-year guidance—could trigger a significant short-term rally. However, a miss on key metrics or new regulatory hurdles for the Albertsons merger could lead to a sell-off.

Appreciate if you could share your thoughts in the comment section whether you think KR could provide an earnings beat and a positive reaction could gather a short price surge.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.