Kroger shares gain for a second session in a row on Wednesday, company explores the opportunity to sell convenience stores

October 12, 2017 10:29 am

According to a statement by Kroger Company (KR) on Wednesday, it is exploring the opportunity to sell convenience stores in an attempt to renovate its business amid fierce competition among brick-and-mortar and on-line food retailers.

The shares of Kroger Company closed higher for a second consecutive trading session on Wednesday. It has also been the sharpest daily surge since October 3rd. The stock went up 1.22% ($0.25) to $20.78, after touching an intraday high at $22.00, or a price level not seen since September 13th ($22.08).

In the week ended on October 8th the shares of the largest supermarket operator in the United States added 2.84% to their market value compared to a week ago, which marked the best performance since the week ended on September 3rd.

The stock has extended its advance to 3.59% so far during the current month, following an 8.28% slump in September. The latter has been a second consecutive month of losses.

For the entire past year, Kroger shares retreated 17.50%. The stock has fallen another 39.79% so far in 2017.

Kroger operates 784 KwikShop, QuickStop and Tom Thumb convenience stores located in 18 states, which generated $1.4 billion in revenue last year. Kroger also operates almost 2 800 supermarkets in the United States.

“This is the result of a review of assets that are potentially of more value outside of the company than as part of Kroger”, the supermarket operator said in a statement, cited by Reuters.

The company has also introduced price cuts, as it competes with retail giant Wal-Mart Stores Inc, the newly formed venture between Inc and Whole Foods Market as well as discount providers such as Lidl and Aldi.

Meanwhile, the operator said it expected to generate $400 million in incremental operating margin through the “Restock Kroger Plan” by the year 2020. Additionally, over $4 billion in free cash flow is expected to be generated during the upcoming three years, which would be two times more compared to what Kroger generated during the prior three-year period.

The company also projects that its identical supermarket sales for the fiscal year ending in January 2019 to surpass current fiscal year sales, while its earnings per share are expected to remain flat or increase slightly during the same period.

According to CNN Money, the 24 analysts, offering 12-month forecasts regarding Kroger Company’s stock price, have a median target of $23.50, with a high estimate of $34.00 and a low estimate of $17.00. The median estimate is a 13.09% surge compared to the closing price of $20.78 on October 11th.

The same media also reported that 15 out of 26 surveyed investment analysts had rated Kroger Company’s stock as “Hold”, while 8 – as “Buy”. On the other hand, 3 analysts had recommended selling the stock.

Daily and Weekly Pivot Levels

With the help of the Camarilla calculation method, today’s levels of importance for the Kroger stock are presented as follows:

R1 – $20.90
R2 – $21.01
R3 (Range Resistance – Sell) – $21.13
R4 (Long Breakout) – $21.47
R5 (Breakout Target 1) – $21.88
R6 (Breakout Target 2) – $22.04

S1 – $20.66
S2 – $20.55
S3 (Range Support – Buy) – $20.43
S4 (Short Breakout) – $20.09
S5 (Breakout Target 1) – $19.68
S6 (Breakout Target 2) – $19.52

By using the traditional method of calculation, the weekly levels of importance for Kroger Company (KR) are presented as follows:

Central Pivot Point – $20.42
R1 – $21.16
R2 – $21.68
R3 – $22.42
R4 – $23.15

S1 – $19.90
S2 – $19.16
S3 – $18.64
S4 – $18.11

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